Investor News recently reported on a study that concluded that most retirees want guaranteed lifetime income.
Let me say this upfront, I know the author, Mary Beth Franklin, and Gary Baker, who is quoted in the story.
And, based on my conversations with Baby Boomers about retirement income, I agree with the results of the study Mary Beth is reporting on – retirees want guaranteed lifetime income.
If they want it and it’s easily available, why don’t more people purchase and own it through income annuities?
This same question is posed by many consumerists and academics.
My answer is pretty straight forward:
- The financial world (provider and producer) is geared to managing money, and not to offering annuities.
- There are lots of myths about income annuities, and confusion with their often-criticized cousin–deferred annuities.
- There has been little education about why these income annuities are an essential part – and I said part – of an effective retirement portfolio.
A Morningstar article I was reading shared 10 ways to curb taxes in retirement.
It provided tips on withdrawal sequencing, maximizing your deductions and other recommendations.
While I found it to be a useful article about some tactical ways to save tax money in retirement, the story focuses on things you should do on a yearly basis.
It misses – as most of these types of stories do – the big strategic approaches you should take as part of smart retirement income planning. The key is to expand your choices beyond investments to look at annuities, life insurance and credit.
These products, when combined with everyday living choices, will provide the most effective tax reduction strategy you can have.