Your Money

Living Longer Without Outliving Your Money

Posted: 1/7/2011

You can get help estimating your “magic number” before you retire.

(NAPSI) - The United States Census Bureau projects the average American’s life expectancy to be 78.3 years, the highest it’s ever been. Five years ago, the average life expectancy was just over 77 years and experts project it will continue to rise.

With Americans living longer—and therefore facing many additional years in active retirement- financial planning has never been more critical.

Experts recognize that not knowing exactly how long you will live, however, makes it difficult to determine how much money will be needed to comfortably retire. Annuities can bridge the gap in a retirement planning strategy.

“Traditionally, people underestimate how long they’ll live and overestimate the value of a large lump-sum balance sitting in a retirement account,” says Chris Littlefield, president and CEO of life insurance and annuity provider Aviva USA. “One way to avoid outliving your money is with an annuity that offers the benefit of guaranteed income for life.”

Living Longer, Living Well

Through financial planning, life insurance and retirement advisers encourage clients to define—to the best of their ability-future income needs. In addition, retirees should remember the benefit of taking a diversified approach.

That is why many people nearing retirement are taking a hard look at, and incorporating annuities into, their retirement strategy. Annuities are a sound financial tool to ensure a level of income security, and help people avoid the potential of becoming a financial burden on their loved ones.

A key attribute of an annuity is a consistent income stream to cover long-term expenses that may surface through the years. Knowing that a consistent cash flow is possible allows those nearing retirement to reduce the risk that misjudging their “magic number” could mean.

It also provides a peace of mind, as many retirees seek to accurately estimate how much money they will need throughout their retirement. Littlefield notes that while annuities are not the “be all, end all” to retirement planning, they do add an element of stability to an otherwise unpredictable process.

“With so many Americans having spent their entire life in the workforce, we have grown accustomed to a steady stream of income,” Littlefield said. “That is why many of our new customers are taking advantage of the lifetime income benefits in their annuities. With the right planning, it’s possible to keep this in place without dipping into your life savings and still have access to your annuity’s principal.”

As every person’s financial situation is unique, choosing tools that provide lifetime income is a subject that should be discussed with a qualified financial adviser.