The Immediate Annuity and
Retirement Income Portfolios

Immediate Annuities and Retirement Income Portfolios

How Does An Immediate Annuity Work?

A Single Premium Immediate Annuity (SPIA) is purchased with a single payment, and begins generating income payments shortly after purchase. It can be used for long-term retirement planning for the future seniors who require a guaranteed retirement income that cannot be outlived. Their primary concern is to not run out of income.

The Immediate Annuity Can Be Used For Other Purposes

SPIAs can be issued with a specified income period. For example, when you hear about someone winning Megamillions or PowerBall and they have opted for payments over a 20 year period, it is an immediate annuity providing the payments. In cases such as these, the Lottery Commission has purchased the annuity.

Quite often, in large court settlements, the judge has the option to specify that an annuity be purchased rather than have the lump sum turned over to the aggrieved party, especially if that person has no experience in handling a large sum of money.

The Immediate Annuity and Retirement Income Portfolios

When you speak with an investment counselor, you'll find they'll use a common solution, which is a combination of mutual funds and bonds. If you speak with insurance brokers, they'll recommend the annuity. BenefitsLab believes there's a middle ground.

A recent study by Milliman, a trusted third-party actuarial firm, compared the probability of meeting income goals with two portfolios: (1) an Equity/Bond allocation and (2) an SPIA/Equity/Bond allocation. The results were as follows:

	Withdrawals from Mutual Funds Only		Adding SPIA to the Mix

CASE	Probability of Meeting Income Goal	Equity/Bond Allocation	Probability of Meeting Income Goal	SPIA/Equity/Bond Allocation

1	69%	85%/15%	84%	70%/16%/14%

2	82%	65%/35%	97%	60%/18%/22%

3	78%	65%/35%	94%	60%/20%/20%

In addition, more funds were available to leave to their family.

Our Conclusion: The Immediate Annuity has a place in a Retirement Portfolio.

The following link is to the actual 28 Page Report. In our opinion, all the "meat" is in the two page Executive Summary because most of the balance is written in "actuarial-ese."

The Immediate Annuity and Retirement Income Portfolios

Want More Info? ... Russ Swallow ... 508-831-0805
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Neither Russ Swallow nor BenefitsLab nor BenefitsLab Insurance Agency, Inc. are Registered Investment Advisors nor are we licensed to sell securities. We do not offer investment advice nor do we participate in any fees derived from any other advisor’s investment advice. We are a Professional Employee Benefit Consultant and Broker and our sole source of income is derived from commissions based on common-sense insurance recommendations.