Increasing Income in Retirement


Increasing Income in Retirement

The following is a guest contribution by Randy Kitzmiller, Regional VP of Annuities for Ash Brokerage.

If your clients want to maintain their standard of living throughout retirement, they need increasing income as part of their strategy. 

Take for example a couple, both age 65. It's likely that one of them will live an additional 24 years. If you use the Rule of 72 at a 3 percent inflation rate, they will need to DOUBLE their income in those 24 years to keep up with the same standard of living. 

The math doesn't quite add up with a variable annuity with a high water mark strategy. If they have an income value of $1 million and a 5 percent payout, they start with $50,000 of income. For their income to increase to $100,000 in 24 years, they need the income value to grow to $2 million. While mathematically this sounds possible, donít forget that they have to overcome a 5 percent withdrawal, fees of up to 3.5 percent and any market loss. 

Using an annuity income strategy gives you much better odds. Your clients will get an annual reset in the income and accumulation phase, and approximately 77 percent of the time, they would receive an increase in income. 

Don't wait 24 years to find out if your clients have enough income. Increase their odds and income by looking at different annuity strategies today.