Guaranteed future income annuities for retirement

The landscape of retirement has changed dramatically over the last few decades. With the number of traditional pension plans dwindling, the future of Social Security uncertain, and the rising costs of healthcare, people are rethinking their approach to living in retirement.

Whether your objective is to finish your master’s degree, start your own business, or perfect your tennis game, you need to ask yourself: Will I have enough money to retire and live comfortably?

A great way to be retirement-ready is to start saving early and by planning ahead. For many people looking to fill the retirement income gap, that includes adding income annuities to their retirement plan. With so many products to choose from, you may want to consider adding New York Life’s Guaranteed Future Income Annuity (GFIA), a flexible-premium, deferred-income annuity, to your retirement income arsenal.

If you’re still a few years away from retirement, a GFIA can be a great way to ensure that you have a reliable source of lifetime income coming in during your nonworking years. Unlike with some other annuities, the income won’t fluctuate with the financial markets, so you can be certain of the amount you’ll receive. This can help mitigate concerns over outliving your savings. Additionally, with a variety of payout options available for GFIAs, you can structure your retirement plan the best way you and your financial professional see fit.

How retirement annuities work

• When you purchase a Guaranteed Future Income Annuity (GFIA), you make an initial premium payment and select a future date at which your guaranteed lifetime income will start (two to 40 years from the initial premium payment; certain age restrictions may apply).
• Then, during the deferral period, the time between your initial premium and your income start date, you have the option of making subsequent premium payments at any time (up until two years prior to your income start date). The initial minimum premium payment is $5,000, and minimum subsequent premiums are $100. Additional premium payments will receive the payout rates in effect when premiums are received.¹
• After your deferral period, you’ll begin to receive guaranteed income payments, which will last for the rest of your life. You can customize your payment stream to include another annuitant, legacy options, and inflation protection. (Note, limitations and restrictions may apply. Please ask your agent for more information.)

When should I buy an annuity?

A GFIA appeals to pre-retirees between the ages of 55 and 65 who plan to retire in five to 10 years, allowing them to look ahead with peace of mind.

By purchasing a GFIA in this age range, you can benefit from a guaranteed, sustainable method of maintaining income in retirement, with potentially higher income payments than you could achieve elsewhere, and a reduction of some market risk from your overall portfolio during the final years of your pre-retirement—when the consequences of a market downturn could be significant.

• Those closest to retirement should be aware that while mutual funds can be excellent long-term investments, their value will fluctuate and may fall significantly in a recession.
• Income annuities can offer the security and peace of mind needed to face the future with confidence and bring you closer to your retirement goals. The flexibility of a GFIA can help jump-start a customized retirement income solution.

While purchasing an annuity before retirement age is advisable, you don’t want to purchase one too early.

Ages 18–34

If you’re in the 18–34 age range, market growth should be your main focus. At that age, you want the potentially unlimited upside that investing can offer while you can afford to weather the ups and downs of the market. If your money is locked up in an annuity, your upside is limited. Additionally, if you need to take money out early, there are typically penalties associated with early withdrawal.

Ages 35–49

If you’re between 35 and 49, you still have a long life expectancy, and plenty of time to take advantage of potential market growth (or weather market volatility).

Ages 50+

Once you reach 50 and your retirement is on the horizon, it’s a good time to start looking at annuities. With so many options to choose from, education should be your starting point. Speaking with a financial professional can help a great deal in finding the right product to structure into your retirement plan. At this point, you’ll have a better idea of the value of your portfolio and savings, when your retirement date will be, what your healthcare needs might be in the future, and what kind of legacy you wish to leave behind. A financial professional will be able to go over your situation and recommend the best options and course of action to help you secure the retirement you want.

Purchasing an annuity for your retirement plan

Having guaranteed income in retirement is a good idea for any individual; however, not everyone may need an annuity. Annuities can have higher fees and less flexibility than some saving options. Additionally, you may end up contributing more than what was paid out (if you pass away early), in which case you will no longer have that money to pass down to family members. If you’re exceedingly wealthy, have saved a lot, or have a business that will continue to make you money in retirement, tying your money up in an annuity may not be the best course of action. However, for most people, an annuity can be a tremendous help in supporting your lifestyle and ensuring you don’t outlive your savings in retirement.

Related: What is the primary reason for buying an annuity, and will it be a good investment?

Are annuities a good investment for seniors?

If you’re a senior and concerned about outliving your savings, an annuity can be a great way to ensure a steady stream of income in retirement, regardless of economic circumstances. Additionally, some annuities may provide a tax benefit or even a death benefit for your spouse or family members. However, they can be expensive and may not be necessary for all individuals.

Whether you’re thinking about purchasing an annuity or simply want to start getting into the specifics of your retirement plan, speaking to a financial professional can help you make the right decisions based on your circumstances and goals.

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¹The ability to move the income start date is not available for the life-only option. The policy owner can accelerate the start of income payments to any date 13 months after the latest premium payment or defer income payments for up to five additional years from the original income start date selected. Payout amounts will be adjusted; this can be elected one time.

Guarantees are subject to the claims-paying ability of the issuer.

The Guaranteed Future Income Annuity is issued by New York Life Insurance and Annuity Corporation (NYLIAC) (A Delaware Corporation), a wholly owned subsidiary of New York Life Insurance Company (NY, NY).

For most jurisdictions, the policy form number for the New York Life Guaranteed Future Income Annuity is ICC16D-P06 (it may be 211-P100). State variations may apply