If I wanted retirement income I could never outlive, I would start with one question: What income will keep coming for as long as my wife and I are alive? I can build a portfolio that produces income, but for this part of my retirement plan, I want a contractual lifetime guarantee.
I always tell people I plan to live to 100. Whether that happens or not, I want a plan that covers the possibility of a very long retirement without forcing either of us to worry about when the money stops.
That is why I would consider an annuity with a lifetime income benefit. My goal would be to create a personal pension that protects both of us from outliving our income.
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1. I Would Start With Lifetime Income for Both Spouses
Municipal bonds, dividend stocks, and rental properties can all help produce retirement income. But they do not provide the same insurance contract promising payments for as long as both spouses live under a joint lifetime income arrangement.
For this particular goal, I want to shift longevity risk to an insurance company. That means choosing a contract designed to keep paying even if my wife or I live much longer than expected.
My wife, Holly, is four years younger than I am, so I would build the plan around both of our lives. If I pass away first, I want her income to continue without requiring her to immediately sell stocks or manage investment withdrawals.
The guarantee is the reason I would buy this part of the plan. It remains subject to the contract’s terms and the issuing insurance company’s ability to meet its obligations.
2. I Would Compare What $750,000 Could Provide
In the video above, I use a Nevada illustration with a $750,000 premium. I model myself at age 55 and my wife at age 51, with income beginning about 10 years later, when I am 65 and she is 61.
The Midland National illustration shows $115,950 per year in joint lifetime income. That is approximately $9,663 per month from the annuity!
Here are the key numbers from that example:
- Initial premium: $750,000.
- Starting ages: 55 and 51.
- Planned income start: About 10 years later.
- Illustrated annual lifetime income: $115,950.
Those figures belong to the example in the video. Your available payout would depend on your ages, state, income start date, contract, and the rates available when you apply.
Social Security could eventually add another source of income. However, I would coordinate those benefits around each spouse’s eligibility and claiming date, rather than assume both checks begin when I turn 65 and my wife is 61.
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3. I Would Buy This Annuity for Income
For this portion of my money, I would prioritize lifetime income over account growth or leaving the largest possible inheritance. I want to know how much I can receive and how long those payments will continue.
In the video’s illustration, the withdrawal rate is 15.46% of the original $750,000 premium. Multiplying those figures produces the $115,950 annual income amount.
That 15.46% is a withdrawal rate in this illustration, not an annual investment return. It describes the income available under the illustrated benefit after the waiting period.
I would also look closely at the company behind the contract. In the video above, I consider Midland National’s history, financial strength rating, and Comdex ranking because I want an insurer capable of supporting a potentially long retirement.
💡 Pro Tip: When comparing income annuities, ask what the quoted percentage actually represents. A lifetime withdrawal rate and growth in your accessible account value are different things.
4. I Would Understand What Happens When the Account Value Reaches Zero
One of the most important points in the video is that the account value and the lifetime income benefit serve different purposes. The account value can decline while the contractual income continues.
In the video above, index credits can add to the account, while rider charges and income withdrawals reduce it. The projected balance eventually reaches zero around my mid-70s, but that does not end the illustrated lifetime payments when the benefit’s requirements are followed.
That is the protection I am purchasing. If I live to 100 or 110, the lifetime income benefit is designed to keep paying.
The projected growth shown in the video is an assumption, not a guaranteed account balance. I would not buy this contract expecting the illustrated index credits to occur every year.
I would also understand the death benefit. In the example, if my wife and I both die while a death benefit remains, that benefit can pass to our beneficiaries under the contract’s terms; I would not assume the original premium remains available after years of withdrawals and charges.
5. I Would Review the Timing Rules and Enhanced Benefit
The timing of income can affect the payout. In the video above, I explain that the illustrated Midland benefit uses the younger annuitant’s birthdays in its income calculation, which can produce different timing from simply counting full years after purchase.
For example, if I purchase in July and my wife’s birthday is in September, the first relevant birthday arrives about two months later. Under the rules described in that illustration, the tenth birthday could arrive in roughly nine years and two months.
Waiting the full 10 years could move the example into a higher payout, around $118,000 annually. I would verify the exact dates and rules in the actual illustration before choosing when to begin income.
I would also review the enhanced lifetime withdrawal benefit. In the video’s example, it can temporarily double income if either spouse meets specified conditions, including being unable to perform two of six activities of daily living for 90 days and having a physician certify that the condition is permanent.
The increased payment lasts only while account value remains. Once that balance reaches zero, the regular lifetime payment of approximately $116,000 continues under the illustrated benefit; the doubled amount does not continue for life.
6. I Would Research My Options Before Making a Decision
I would start with the annuity calculators on my website. If the priority is the highest lifetime income, I would explore the income rider options and compare the available payouts and carriers.
Then I would review the details: coverage for both spouses, the income start date, rider charges, and what happens after the account value is depleted. I want to understand the contract before purchasing it.
If you would like help, schedule a call with me. I can answer your questions, show you available options, and help you purchase an annuity if you decide it fits your goals.
For my own retirement, the objective is straightforward: income that continues for as long as my wife and I live. Knowing Holly could keep receiving payments without immediately having to manage or sell investments is a major reason this approach appeals to me.
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