Retirement Options To Not Outlive Your Retirement Savings

Published January 17, 2018
The most prevalent retirement options today present a great risk: you could outlive them. Here we present five retirement options you can't outlive.
  • The retirement landscape has changed significantly over the last generation, due in large part to increasing lifespans and the decline of employer pensions
  • Retirement options do exist to get a guaranteed monthly paycheck that lasts your lifetime, including new, lower minimum products available digitally

I’ve been writing recently about the trends related to longevity and how they impact the retirement landscape. Today, I focus on five retirement options to get lifetime income that comes every month and is guaranteed for as long as you’re alive (so that you don’t outlive your retirement savings).

If you don’t have guaranteed monthly income, you’re forced to guess how long you live and spread your spending appropriately over time. It’s a hard thing to accomplish, and just about everyone gets it wrong.

Today’s most popular retirement options provide you with an asset base to draw down, but no guarantee that the assets you’ve saved will last as long as you’re alive.

Retirement Option #1: Longevity Annuity

A longevity annuity is issued by an insurance company and is also known by the names longevity insurance and deferred income annuity. You can purchase a longevity annuity for yourself from an insurance company using your pre-tax or post-tax retirement savings, generating a guaranteed income that lasts as long as you do. It’s a great way to diversify your portfolio, and make sure that all, or most, of your basic retirement expenses will be covered for as long as you live. Historically, a longevity annuity required a large upfront purchase and was bought all at once, usually close to retirement. At Blueprint Income, we’ve made it easier to get everything a longevity annuity has to offer without having to (1) spend a lot all at once, (2) choose just one insurance company, and (3), wait until retirement. We’re calling it the Personal Pension.

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How Can I Purchase a Longevity Annuity?

At Blueprint Income, we offer longevity annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.

 

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From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.

Retirement Option #2: Personal Pension

The Personal Pension is Blueprint Income’s revolutionary way to get a pension today when employers are no longer offering them. You can think of it as a no-risk, lifelong supplement to what you’re doing with your 401(k) and IRA. It’s like a longevity annuity (see above), except you purchase it in small pieces over time rather than all upfront. It’s low-cost to open a policy and you have the option (but not obligation) to continue contributing to your policy after you open it. Each purchase you make locks in an additional amount of monthly income, essentially creating a basket of longevity annuities to secure your retirement and ensuring you don’t outlive your retirement savings.

How Can I Start a Personal Pension?

A Personal Pension is a contract between you and top rated insurance companies. By making contributions to your Personal Pension over time, you develop a portfolio of guaranteed annuity income available in retirement. Blueprint Income offers a Personal Pension account with the lowest minimum, $5,000. After opening an account, you can make subsequent contributions of as little as $100, each of which will increase your pension check.

Here you can see what contributing to a Personal Pension will guarantee you in annuity retirement income. After just a few years in retirement, you’ll have recouped your initial investment, and the rest will be profit.

You can continue with the enrollment process on your own or fill out the information to have one of our specialists follow up with you by starting with the Personal Pension Builder, where you’ll be able to set a goal for how to grow your pension over time. Note that all future contributions are optional, but it’s always great to have a goal.

Retirement Option #3: Immediate Annuity

If you want the income to start right away, you can purchase an immediate annuity. This is basically the longevity annuity explained above, but for people who are already in or approaching retirement. Because the immediate annuity starts paying out — well, immediately (or at most within 12 months) — the payouts you’ll get per dollar of premium will be lower than with a Personal Pension or other kinds of longevity annuity. (So, if you have the ability to start funding your retirement income earlier, rather than later, you should.)

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How Can I Purchase an Immediate Annuity?

At Blueprint Income, we offer immediate annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.

 

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From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.

Retirement Option #4: Employer Pension

If you’re lucky enough to have a pension through your employer or union, then you’re far ahead of most folks. But the only way a pension provides longevity protection is if you don’t opt to get the lump sum payment. An employer pension plan is obligated to pay you a monthly income unless you opt out. If you opt out, you’d get a set amount at retirement and lose all the longevity protection of monthly lifetime income.

Retirement Option #5: Social Security

The best way to use Social Security as longevity insurance is to delay receiving payments for as long as possible. Each year you delay beyond what Social Security Administration defines as full retirement age increases your future monthly payments by 8%. Currently, the longest you can delay Social Security is until age 70.

There are many other retirement options out there. A 401(k), IRA or real estate are popular examples. But none of these provide a guaranteed amount of income each month, no matter what happens in the market or how long you live. The products above are the only retirement options that ensure you don’t outlive retirement savings, and we believe, along with leading academics, that they belong in everyone’s retirement portfolio.

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Matt Carey

Matt Carey

Financial Planning Professional

Matt Carey is the co-founder and CEO of Blueprint Income. He believes in the power of technology to make retirement simpler. Matt is a regular contributor to Forbes.com and has been quoted in both the New York Times and Morningstar.