As you get closer to retirement, you’ll need to ensure your income will support basic cost-of-living increases, particularly for healthcare, and set up a flow of income payments that can withstand market fluctuations. As average life expectancy continues to increase, your income will need to last for as long as 20 to 30 years – perhaps more. That’s why you should understand how to incorporate creating lifetime income from an annuity in your retirement planning.*
When you have money in an annuity, such as the annuity accounts in a retirement plan, you can receive cash withdrawals, annuity income payments, or a combination when you retire. If you choose annuity income payments, you’re opting to pool your assets with others and receive income for as long as you live. An insurance company, such as TIAA, administers the pool using the assets of those who live shorter than expected to provide income for those who live longer than expected.
To get a better sense of annuity income changes for retirees, compare recent annuity income announcements from TIAA-CREF:
To learn more about annuity income, contact us.
That’s why you should understand how to incorporate creating lifetime income from an annuity in your retirement planning.*
When you have money in an annuity, you can receive cash withdrawals, annuity income payments, or a combination of both when you retire. If you choose lifetime annuity income payments, your assets will be combined with others and you’ll receive income for as long as you live. An insurance company administers the pool using the assets of those who live shorter than expected to provide income for those who live longer than expected. You can choose to receive income annuity payments for the life of one or two people. You can also choose a lifetime payout option that guarantees continuous payments for a set period of time (10, 15 or 20 years).
To learn which type of annuity and income option makes the most sense for you, consider these 5 steps when selecting an annuity:
For more information about each of these points, read our article detailing the Five Steps to Selecting an Annuity.
An experienced financial consultant can show you different scenarios to help you understand how much guaranteed lifetime annuity income you’ll need to support basic cost-of-living expenses.
These scenarios are based on information you provide — like when you want to retire and how you want to receive income — and additional assumptions, like different expected rates of return.
This information can then be collected into an in-depth report that helps you determine the amount of monthly income you might receive from a lifetime annuity – and compares it to other options.
By understanding how much lifetime annuity income you may need, you’ll be better prepared to address your financial needs as you get closer to retirement.
* Any guarantees under annuities are subject to the issuer's claims-paying ability. Payments from variable accounts will fluctuate based on investment performance.
Annuities are designed for retirement and other long-term goals. If you make a withdrawal prior to age 59 1/2, you may be subject to an additional 10% penalty on earnings, in addition to ordinary income tax.
Variable annuities may be subject to market and other risk factors. See the applicable product literature or visit tiaa-cref.org for details.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity and may lose value.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.