Meg’s Retirement Income Story: SPIA

Updated : Aug 30, 2019 in Articles

Meg’s Retirement Income Story: SPIA


Hi, I’m Meg. Like many other retirees and
people nearing retirement I have concerns about having a reliable source
of income that I can’t outlive. One option I’m considering is a single
premium immediate annuity. I recently shared my financial concerns and what
I’ve learned about these annuities with my daughter, Lisa over coffee. Hi mom.
How was the trip? Great Lisa. The kids are getting so big but I wish your brother
hadn’t moved so far away. I don’t know how often I’ll be getting out to see
them. Air fares are really up. I know what you mean everything seems to be going up.
Yeah, some things more than others like health care. You know, unexpected medical
expenses when your dad was sick took a big chunk out of our retirement savings.
Mom, are you okay money-wise? I don’t know. It’s not like we didn’t plan. When we
retired, your dad and I both had Social Security benefits, our retirement savings
and a little pension from your dad’s first job. That was before most companies
stopped offering pension plans. But I only get 50% of his pension payment now
that he’s gone. Our retirement savings have had to make up the difference. And
the crazy financial markets don’t make it easy. You’ve got that right. I feel
jittery taking money out of our college savings fund every time Emma’s tuition
comes due. We have Jerrod and Madison to think about too. I have to admit, I’m more
than a little nervous about running out of money.
Your grandmother lived to 86. Can I make my savings last that long?
Maybe I should have waited until I turned 66 to take Social Security
benefits, instead of starting them at 62, so I receive larger payments. My benefits
replace the less than half my pre-retirement income. Mom, you always
told us what’s done is done. Looking back won’t help. You have to move
ahead. Talk with someone who’s knowledgeable and understands your
financial concerns. Let me give you our financial professionals phone number.
Lisa was right about moving ahead. I called and met with her financial
professional. There were a lot of things, besides my Social Security benefits, that
I needed to think about: like health care costs, my life expectancy, market
volatility and inflation. Like me, you might
be surprised at the impact inflation can have. Just look what can happen if
inflation goes up 3% a year. The amount of groceries or other goods that $100
will buy in the future, may be considerably less than the amount you
can buy today. Will you have the income to cover these increases? I wasn’t sure I
would. Health care costs have been increasing even faster, about 5% a year
over the past 20 years. Along with inflation, women should plan
for longer retirement time-frames and the possibility of spending at least part of
their retirement years alone. On average, a woman age 65 can expect to live an
additional 20 years and outlive her spouse. And life expectancy compounds
with age. Looking on the bright side, that gives me more time to perfect my tennis
serve. But making my income sources last long enough is also a concern. I know one
way to do this is to grow my retirement savings by investing part of them in
stocks. But the stock market is so volatile. And it seems that even with
cash investments, there’s still some market uncertainty.
The bottom line is, I don’t want to take the chance that: I’ll withdraw too much
money at the wrong time, my investments won’t be able to make up the difference,
and I’ll run out of money. So what did I do? Hi Lisa. Sorry I’m late, traffic! No problem I just got here myself.
What’s up? Remember how I said I was concerned about having a reliable
retirement income? I want to be able to get out to see your brother and the kids
more often. And do other things I like without worrying about running out of
money. I remember. Are you having problems? we can help if you need us to. It’s sweet
of you to offer but I’m fine. I talked with a financial professional you
recommended. We went over my financial situation and it looked at my different
investment options. I considered them all and did some research on my own. I’ve
decided to buy a single premium immediate annuity. It’s straightforward. I
can use some of my savings to buy it. The annuity will pay me a guaranteed income
I can’t outlive. I won’t have to worry about figuring out how to make my money
last. Sounds good mom. And since you’re in a decisive mood, what do you think? Should we order pie with our coffee today? Definitely! A single premium immediate
annuity was the right choice for me. It may be right for you too. A financial
professional would be happy to review your financial situation with you and
discuss your options. you

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