Insuring a portion of your income stream is one of the best ways to make sure that you are not anxious in retirement. Marketwatch’s Robert Klein talks about “How to reduce retirement anxiety” in a recent article. Two different studies done by Towers Watson found that those retirees who have annuitized income streams are the happiest and worry least in retirement. People who have at least 50% of their income coming from an annuity or pension were less likely to have financial worries in retirement than those without a guaranteed income stream. Wouldn’t you like to have less worry in retirement? Since you don’t have control over having pension income, an annuity is a good way to reduce your anxiety in retirement.
Having a retirement plan that guarantees monthly income payments can also make you less anxious during your working years. Those who know that they have an income stream coming during retirement have an increased confidence that they will not only be able to retire when they desire, but that they will be able to remain retired. You also don’t have to worry so much about daily stock market changes or even crashes when you know that you have predictable income for retirement other than Social Security. It’s comforting to live without the financial anxiety that can come from tumultuous markets and unknown income levels in retirement.
If you are lucky enough to have a private pension that will pay you lifetime income during your retirement, that’s great. But if you are like most of us, you’ll need to create an income stream on your own. It’s not usually the best idea to wait until retirement to purchase your annuity unless you are only a few years away and haven’t yet bought one. If that is the case, an immediate annuity is a good way to create guaranteed lifetime income. The article lists four reasons why it’s best to purchase your annuity and secure your income stream before retirement. You don’t know how much money you will have to buy an immediate annuity unless your money is invested somewhere with fixed interest that won’t change in value and you don’t withdraw any of it. You don’t know how much income you are going to receive until you buy an annuity. The future retirement expenses you plan to pay for with your annuity are unknown until retirement time. Finally, you will continue to have anxiety about your future until you find a guaranteed income source.
Deferred income annuities and fixed indexed annuities with income riders are two products that will help you create a guaranteed income stream for your future. The longer that you defer receiving payments from a deferred fixed annuity like these, the higher your monthly income payments will be. When you purchase a deferred fixed annuity, there are some unique advantages that help you plan for your future. You know the amount, timing, length, and taxes that will be associated with your future annuity income. It’s important to contact an annuity expert to help walk you through an annuity purchase. Studies show that the knowledge of future annuity income will greatly reduce your anxiety about retiring both long before retirement and after.