“My wife and I are 67 and 66 and will both retire soon. We’ve used our 401(k)s to save for retirement and I have about $700,000 (depending on the day) and she has just over $500,000 – depending on the day.
The 401(k)s have been great to us to get us here. But, if we had the choice, we would really prefer pensions. Our companies don’t offer pensions. Can we get into pensions on our own?”
Yes. It’s kind of tempting to leave you hanging there, but that wouldn’t be very nice. I shall try to be nice.
Pensions are quite simply annuities that were purchased on behalf of their employees by employers. Annuities provide a guaranteed lifetime of income that can be structured to cover one person’s life, the lives of two people, and quite a number of other options. Annuities can be purchased by individuals. Hence, you can ‘convert’ some/all of your 401(k) dollars into guaranteed streams of lifetime income.
Annuities come in many, many flavors. Some will be very good for you. Some will be very toxic. Annuities are offered by many companies. Some are very sound and some are financially concerning. Annuities can be a solution with one single contract. Annuities can be arranged within a sophisticated strategy using multiple types of plans with multiple benefits. Annuities can provide you with wonderful peace of mind for a lifetime. Annuities can be a source of annoyance for years and years.
How do you give yourself the best opportunity to select the most appropriate annuity (or annuities) for you and your wife? This will require you to take some time, do some homework, get trained up on annuities, and likely work with a financial advisor well versed in annuities. Annuities are financial tools. They are quite complex. Anyone telling you different (salesmen for instance) are fibbing to you in a big way. Guarantees are only as good as the ability of the annuity company to pay them. Your advisor should be able to cover the entire annuity landscape with you, explain the pros and cons, recommend the course of action best for you, and then put your plan into action.
Our More than Money advisors have partnered with one of America’s largest and most reputable annuity brokerage firms. If you wish to explore how to use annuities to create your own private pension – please contact our office and schedule a time to visit with us.
If you have questions or comments, please send them to Gene@AskMtM.com