Retirement Income Planning by Jason Shockey

I found an article in the New York Times on “Retirement Income Planning.” I learned that people are living longer. And by planning too late, many people are running the risk of outliving their retirement nest egg. One possible solution is the annuity.

An annuity is an investment that pays a certain amount or percentage each month for the rest of a person’s natural life. The amounts are determined by how much a person invests and what features they may have chosen, such as inflation protection and early withdrawal in the event of an emergency.

Annuities function similar to life insurance. They pool the risk of a large number of people and their average life expectancies. When a person lives longer than they are expected to, they have beaten the odds. If they don’t, someone else may enjoy the benefit of the unused portion of their investment. It’s the law of averages.

One benefit is annuities are not easily liquidated, which can protect a person against the risk of overspending in the golden years. Some of the other risks associated with retirement are market risks, health risks and inflation. The writer encourages the reader to think about these things in advance to be in a better position down the road.

Retirement income planning is the first step to financial survival and hopefully, prosperity in the later years. There are many companies offering many different plans and packages. And there are also scam artists that prey on the elderly. The advice is to be clear on what you want, what you need, and to make sure you’re dealing with a reputable company. (WC271)

Reference:
Rosen, Jan M. (April 10th, 2007). Retirement. Retrieved April 12, 2007, from The New York Times Web site: http://www.nytimes.com/2007/04/10/business/retirement/10Annuity.html?n=Top%2fReference%2fTimes%20Topics%2fSubjects%2fP%2fPersonal%20Finances