In today's times of economic strife, a burning question may be at the forefront of your thoughts: How do I enjoy a nice, long ride into the sunset without depleting my entire savings and retirement investment?
One solution is to invest a large portion of your assets in an immediate annuity, which offers guaranteed income for the rest of your life. Not a good plan should you need that money in the event of an emergency. And if you were to suddenly expire following the purchase of such an annuity, payments would no longer be issued- quickly making this an investment that was both hefty and worthless .
Is there a better solution?
Yes. MetLife has introduced the advanced-life delayed annuity, from this point on simply referred to as the longevity annuity. This clever spin on the standard payout annuity offers protection against outliving your savings, and it comes at a comfortably low price. The concept is simple. Instead of handing over the bulk of your assets to the immediate payout annuity at the point of retirement and immediately receiving monthly payments; you can purchase the longevity annuity with a smaller portion of your money, for example ten percent or so, and it will not begin to pay out for five to twenty years, according to your terms..How can the premium be so low?
Well, insurance companies can provide this sort of annuity because if you die before the age at which you elected to begin receiving payments, you get nothing of it. Live to the age you chose to begin payments, and you have the security of a significant income throughout your later years at a small cost. Compare it to buying health or homeowners insurance with a high deductible- you are protected against major trouble risk for which you would not otherwise be able to pay. In the case of retirement planning, the protection is against the risk of depleting your money should you live a long life, while premiums are kept at a low rate.Buying longevity annuities involves determining the age you think you'll need to begin receiving payments. The older the age you select, the more money you'll receive; however that also means that you could receive no cash back from the investment. So, if you're healthy and Mom and Pop both lived to the ripe old age of ninety, you know what to do.