A paycheck for life? It’s a thing.
There’s been a surge in retirement security benefits, and it’s not from 401(k)s alone.
A record-breaking $104 billion in annuity benefits was paid out by life insurers in 2023. This underscores the growing value workers and retirees put on a paycheck for life, which annuities can guarantee.
Why is this important?
Annuities are unique financial products, like a personal pension, they provide guaranteed lifetime income.
Several factors contribute to annuities’ rise in popularity:
- Decline of Traditional Pensions: With fewer employers offering defined benefit pension plans, individuals are seeking alternatives to ensure a steady income during retirement.
- Demographic Shifts: 11,200 Americans are turning 65 daily, known as the “Peak 65” era. Everyday, more individuals are actively seeking reliable income sources to maintain their lifestyle during retirement.
Research Supports the Impact of Annuities
Fully or partially converting savings from 401(k)s, IRAs, and other accounts into annuities can lead to better retirement outcomes compared to the typical 4% annual withdrawal strategy. This approach is particularly beneficial for those retiring with $250,000 or less in savings – a status that includes more Americans each year.
What’s Next for Retirement Savers?
In an era marked by economic and financial uncertainties, annuities have emerged as a reliable resource for retirement planning, offering both guaranteed income and peace of mind. As traditional pension plans wane and the U.S. population looks to a range of retirement security options, annuities can provide guaranteed income for life.
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