Retirement for savers AND investors

Retirement for savers AND investors

In today's financial environment, what it would take to generate $10,000 in annual income? I see two main consumer categories here: savers and investors.


The savers aren’t risk takers, and they focus mainly on fixed products. The risk for the saver is the uncertainty of future rates. Looking at the current average rates from, let's see what lump sum would be required to generate $10,000 of annual income. 

Type of strategy

Current interest rate*

Lump sum needed

1-year CD



5-year CD



5-year annuity



10-year treasury note





Now let's look at an investor who may have a combination of fixed, bond and equity investments. Assuming a higher rate of return than the fixed products, the lump sum required for them is even smaller. But even though they need less money up front compared to the savers, investors risk the uncertainty of rate of return and longevity.  



Here are two alternatives that eliminate return and longevity risks AND require smaller lump sums: 

1.  A fixed index annuity with an income rider would need only $181,818 to generate $10,000 a year for a 65-year-old. 

2.  An immediate annuity would take approximately $160,000 to generate $10,000 a year with 10-year term certain for a 65-year-old. 

The income from these solutions would be guaranteed for the rest of the client’s life, regardless of interest rates or how long they live.


The Bottom Line: You can secure your clients’ retirement income many different ways. However, both savers and investors can benefit from annuity solutions … and they would potentially save money up front. 


*As of Oct. 8, 2014