The income gap
Turn savings into a personal pension.
Start by totaling the monthly expenses that must be paid regardless of markets: housing, food, healthcare, utilities and transportation. Subtract dependable income such as Social Security and a pension. An annuity can be designed to fill some or all of the remaining gap with income backed by the issuing insurer.
What determines the income amount?
Premium, age, income-start date, single versus joint coverage and survivor or refund provisions all affect the payment. Waiting longer to start often increases the available income, while adding liquidity, a death benefit or coverage for a second life can reduce the initial payout.
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Estimate your potential lifetime income.
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Guaranteed income and cash value serve different jobs.
Some contracts annuitize the premium into an income stream. Others use an income rider while maintaining a contract value. An income rider may display a benefit base that grows by a stated formula, but that base is usually not available as a lump sum. Ask to see contract value, surrender value, benefit base and lifetime withdrawal amount on separate lines.
Questions worth answering before you choose.
How much essential spending needs protection? When should income begin? Does it need to cover one life or two? How much money should remain liquid? Is leaving a legacy important? A clear comparison should model several start dates and products rather than showing only the illustration with the largest headline number.