Many people are familiar with pensions – reliable monthly checks that some retirees receive from their former employers. But employer-sponsored pensions are slowly, but surely, disappearing into the past for private sector employees. According to the U.S. Bureau of Labor Statistics, 38% of private-sector workers had a pension plan, but that dropped to 16% by 2019 [1]. But what if you could create your own pension-like income stream, tailored exactly to your needs? That’s where fixed annuities come in.
A fixed annuity is a financial product you purchase from an insurance company. In exchange for your upfront premium payment or periodic payments, the insurer guarantees you or your beneficiaries a set monthly payment that you can customize. This provides a reliable income stream which can be designed to provide income for all of your retirement days, and if you want, for your spouse’s also, similar to a pension.
But the real power of a fixed annuity lies in its customizability. Through the strategic use of riders and options, you can shape the annuity to meet your specific goals – whether that’s providing for your spouse, protecting your heirs, or ensuring your checks keep up with inflation. Some popular options and riders include:
Period-Certain Options
With a period-certain rider, your annuity payments are guaranteed for a set number of years, even if you pass away during that time. So if you choose a 10-year period certain, your beneficiary would continue receiving payments for the remaining years if you die before the 10 years are up. This provides an extra layer of protection for your heirs.
Amount-Certain Options
Similar to the period-certain rider, an amount-certain option ensures your beneficiary receives a guaranteed total dollar amount from the annuity, no matter how long you live. This could be useful if providing a specific inheritance amount is one of your goals.
Premium-Return Options
This rider guarantees that your beneficiary will receive, at minimum, the total amount of premiums you paid into the annuity. So if you pass away unexpectedly, your loved ones won’t lose the money you contributed.
Survivorship Riders
Survivorship riders allow you to structure your annuity payments to continue to your spouse after you’re gone. This ensures your partner maintains a reliable income stream for the rest of their life.
Cost-of-Living Adjustment (COLA) Rider
This rider automatically increases your annuity payments each year by a set percentage, typically ranging from 1-5%. This helps your income keep pace with the rising cost of living. This can also help offset the effects of inflation.
CPI-Linked Rider
Rather than a fixed percentage increase, this rider ties your payment adjustments to changes in the Consumer Price Index. So your checks will rise in lockstep with the actual inflation rate.
Joint-and-Survivor Benefits
There are several options available to customize annuity payments for yourself or your spouse to match your priorities.
In a time of economic uncertainty, a fixed annuity can offer the stability and predictability you need to retire with confidence. By converting a portion of your savings into a guaranteed lifetime income, you can take control of your financial future, enjoy peace of mind, and enjoy your golden years to the fullest.
Don’t settle for a retirement riddled with uncertainty. Explore how a customized fixed annuity can give you the retirement you’ve always envisioned. Contact us at Hubl Insurance today to get started.
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