If you’re like most, then you have big dreams for your retirement. Whether it’s enjoying the snowbird lifestyle on the beach, pursuing your love of the arts, exploring each and every national park, or opening an in-home “daycare” for your grandlittles, your retirement years should be filled with doing the things you love.
However, there may be one big fat speed bump ahead that’s ready to slow down your hopes and dreams for your retirement: money.
According to a recent study, a whopping 78% of Americans say they’re “extremely” or “somewhat” concerned about not having enough money for retirement. Let’s dig into the report’s numbers:1
- 21% of Americans have nothing at all tucked away for the future.
- 10% of Americans have less than $5,000 saved.
- 16% have between $75,000 and $199,999.
- 25% have $200,00 or more stashed away.
But overall, the study shares that Americans with retirement savings have an average of $84,821 saved for retirement.
And unfortunately, this amount falls short when it comes to having enough money saved for retirement.
Retirement savings: How much is enough?
Well, we can’t give you a hard and fast number—because there are many personal factors that must be taken into consideration. But here are some numbers for you to noodle on:
- According to the Bureau of Labor Statistics, “older households” (those run by someone 65 or older) spend roughly $3,800 a month, or $45,756 a year.2 That equals $1,368,000 over the course of a 30-year retirement.
- According to Time magazine, the average American couple retiring today at age 65 will need $280,000 to cover health care and medical costs in retirement.3
- Long-term care is a big retirement expense to plan for. Here are monthly costs of care:4
- Home health aide: $4,195 a month
- Adult day health care: $1,560 a month
- Assisted living facility: $4,000 a month
- Private room in a nursing home: $8,365 a month
We advise you work with a financial professional to craft the details of your own personal retirement budget.
A solution: the retirement annuity
If all you can see right now are dollar signs, we completely understand. It can be difficult to wrap your head around the numbers. You may be concerned if your savings can last for the life of your retirement. Fortunately, we have a solution: A Bankers Life retirement annuity may be able to offer a way to protect the money you have saved for retirement, while providing extra retirement income.
Here’s some helpful individual retirement annuity information, plus advice to help you decide on the best annuities for your personal situation.
What is a retirement annuity?
A retirement annuity is an insurance product intended to help you accumulate money for retirement while protecting your savings. The best annuities for seniors can help turn retirement savings into an income stream. Here are some popular features of the individual retirement annuity:
- They can help provide financial security, because your principal is always safe from market loss.
- A retirement annuity can offer growth potential and allow you to accumulate interest with traditional fixed and fixed indexed options.
- The best annuities for seniors offer tax-deferred interest accumulation.
- They provide a variety of income options, including guaranteed lifetime income, to reduce the risk of you outliving your savings.
- They may provide a death benefit to your beneficiaries, to help you leave a lasting legacy.
How does a retirement annuity work?
You agree to fund the annuity through either a lump sum of money or through regular payments. Generally, these contributions earn a tax-deferred rate of return as they accumulate.
What are the different types of retirement annuities?
Bankers Life offers several types of annuities, each with different features designed to help meet various retirement goals and financial capacities. Here’s the rundown, to help you determine which are the best annuities for your personal situation:
Guaranteed lifetime income annuity-
option to elect a predictable, guaranteed income stream for life, while still maintaining control and access to your funds. The longer you wait to begin receiving your income payments, the greater your payments may be.
Premium bonus indexed annuity-
option to grow your money through a fixed interest rate or potentially earn interested linked in part to the performance of the S&P500®; you can choose to allocate your funds between these two fixed rate or index value options. Your money isn’t at risk of market downturns because you’re not actually participating in the market. This annuity may offer an upfront premium bonus.5
Fixed indexed annuity-
option to grow your money through a fixed index rate or potentially earn interested linked to the performance of the S&P500®*. Your money isn’t at risk of market downturns because you’re not actually participating in the market.
Traditional fixed annuity—
option to grow your money through a fixed interest rate, on a tax-deferred basis (more on this later). Your principal is protected from losses because your money isn’t affected by market performance.
a simple option to purchase an annuity with a single lump-sum payment and start receiving a guaranteed income stream almost immediately. You can decide whether you want to receive guaranteed payments for life or for a specific period of time.
What are the tax advantages of an annuity?
As mentioned above, fixed annuities offer the benefit of tax-deferred income. This means that, under current tax law, the interest your annuity earns accumulates on a tax-deferred basis. While your annuity is earning interest and you’re not withdrawing money, you don’t pay taxes on interest. You pay taxes only when you take money out of your annuity or you start receiving payments. Because taxes are not paid on the gain of your annuity while it’s growing, your earnings grow faster and build more funds to use during retirement.
Is an annuity a retirement plan?
There are numerous potential sources of retirement income. A retirement annuity is just one piece of the patchwork. Consider working with a financial professional to help you build your plan, find products that can protect your investments, and decide if purchasing an annuity before retirement is a good option for you. According to the Bankers Life Center for a Secure Retirement, Boomers who seek the help of a financial professional feel more confident in their financial decision making and more optimistic about their retirement expectations.6
We’re here to help!
Ready to learn more about Bankers Life annuities? Our agents are ready to help. There are several ways to get ahold of us—just choose the preference that’s most convenient for you! Get started here.
1CNBC, 1 in 3 Americans have less than $5,000 saved for retirement—here’s why so many people can’t save, https://www.cnbc.com/2018/08/27/1-in-3-americans-have-less-than-5000-dollars-saved-for-retirement.html, August 27, 2018.
2NerdWallet, Let’s Get Real: What an Average Retirement Costs, https://www.nerdwallet.com/article/lets-get-real-what-an-average-retirement-costs, May 28, 2018.
3Time, Here’s How Much the Average Couple Will Spend on Health Care Costs in Retirement, http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/, April 19, 2018.
4Genworth, Cost of Care Survey 2018, https://www.genworth.com/aging-and-you/finances/ cost-of-care.html, 2019. 3 The Washington Post, The high price of being an unpaid caregiver, https://www.washingtonpost.com/business/2018/11/29/high-price-being-an-unpaid-caregiver/?noredirect=on&utm_term=.1898da92b492, November 29, 2018.
5CT, NJ, OR and WA are deferred bonus states, and have a continuous deferred bonus.
6Banker Life Center for a Secure Retirement, 10 Years After the Crisis: Middle-Income Boomers Rebounding But Not Recovered, February 2017.
“Standard & Poor’s®”, “S&P®”, “S&P 500®”, “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Bankers Life and Casualty Company. Any indexed annuity is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing this product.