Problems with Retirement Planning

By Bob Plunkett

The biggest problem with retirement planning is that most retirees underestimate how long they are going to live. They save money, but many times They do not save enough to carry them through what is now a much longer life for many people.

But there is a way to guarantee yourself income for life, like other people you know who have  pension plans.

It’s called a longevity income annuities. LIA

 Longevity income annuities are deferred annuities – okayed by the Treasury Department in 2014. Here’s how they work: Say you have $100,000 in retirement savings. At age 65, you use $10,000 of that money to purchase an LIA. Even in the current low-interest-rate environment, such an annuity could pay you $4,830 per year for life – starting at age 85.

As with most financial tools, some people will benefit more than others. People in poor health might not want it. Very wealthy people will not need it. Nor do retirees with a strong benefit pension. And people with a very small nest egg might not be able to participate. But much of the middle class could benefit – and it deserves a look.

The place to start looking is the AARP which uses New York Life as its backer. It has been offering its Lifetime Income Program since 2006. And has brochures with all the important information. And over the years, there will be more programs. Fidelity Investments, Merrill Lynch and Schwab also participate in this planning. You don’t need an expensive estate planner either, as most of the LIA plans are available for little or no fees.