How to choose the best lifetime income options
The Annuity Man
Joe Tomlinson's article at Advisor's Perspectives is a really pragmatic look at the best lifetime income options available for the consumer. Joe is both an actuary and a financial planner, and used to run an advisory firm here in the states. He now resides in England, but is still a well respected and objective source when it comes to retirement planning. That's where he primarily focuses his ongoing research.
When it comes to guaranteed lifetime income, there is only one product type that can provide those payments...regardless of how long you live. Annuities. Yes, the hated annuity word has an absolute monopoly on lifetime income. The annuity industry has done a poor job relaying this important message to the consumer and the 10,000 baby boomers that hit retirement age every single day. Talk about a colossal marketing blunder!
Lifetime income guarantees always come down to life expectancy at the time the payments start. Just like your Social Security, the older you are the higher the payments. The younger you are the lower the payments. The older you are, the less life expectancy you have which means there will be fewer payments....which means those payment guarantees will be higher. Common sense if you really think about it. As a continuation of that thought, the younger you are...the more life expectancy you have which means there will be more payments....which means those payment guarantees will be lower.
Regardless, the annuity carrier (i.e. insurance company) is on the hook to pay. That's the transfer of risk benefit that only annuities can provide.