Using Immediate Annuities To Help Estimate Future Retirement Income

[Liz]

CBS News uses immediate annuities as a way to generate a paycheck from retirement savings to help estimate future retirement income for individuals. Thoughts?

Retirement income scorecard: Immediate annuities - CBS News

 

[scagnt83]

In all it is a good article. Probably one of the best I have seen in a while from the major media.


The biggest critique that I have of it is that it didnt exactly truly explain how each product works and the options within.

For example:
It compares a GLWB to annuitizing a VA. And while they both are methods to produce income from an annuity, the annuity with GLWB will also have the option to annuitize, which would most likely be at a higher rate similar to the VA. BUT, the account value that the GLWB income is based off of is different than the actual liquid account value that annuitization would be based off of.
Furthermore, he didnt point out the fact that the GLWB account had a guaranteed growth rate prior to taking income. The VA and possibly even the FA did not have a guaranteed growth rate prior to taking income.

Also, you loose all liquid access to your money if you annuitize. The GLWB draws down the account value dollar for dollar and allows access to the funds while they exist.

So there are some important distinctions between the two that were not really highlighted.

But overall it was mostly accurate and informational. And refreshing to see an unbiased and even positive review of an often misunderstood product.