When you’re planning for retirement, it’s important to think about more than just your current income. You also need to consider how long that income will last. That’s where lifetime income comes in. Lifetime income is a type of retirement plan that provides you with a steady stream of income for the rest of your life. This guide will discuss what lifetime income is and how it works!
- What is lifetime income?
- How does lifetime income work?
- Types Of Lifetime Income From Annuities
- How do you calculate your lifetime income?
- What are the benefits of lifetime income?
- What are the drawbacks of lifetime income?
- What are lifetime income options?
- What is a lifetime income benefit?
- Next Steps
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What is lifetime income?
Lifetime income is a type of retirement plan that provides you with a steady stream of income for the rest of your life. Annuities are the only retirement plan that can provide this type of income, which is why they’re often called “annuities for life.”
How does lifetime income work?
Lifetime income works by giving you a stream of payments that last for the rest of your life. These payments are based on several factors, including how much money you’ve invested in the annuity, how long you’ve been invested, and the interest rates when you start taking payments.
Types Of Lifetime Income From Annuities
There are two main types of annuities: immediate and deferred. With an immediate annuity, you start receiving income payments right away. With a deferred annuity, you wait to start receiving income payments until later on.
With either type of annuity, the insurance company makes regular payments to you for as long as you live. The payments are based on several factors, including how much money you’ve invested in the annuity and how long you live.
How do you calculate your lifetime income?
The amount of your lifetime income payments will depend on several factors, including how much money you’ve invested in the annuity and how long you live. The insurance company will also factor in interest and mortality rates to calculate your payments.
What are the benefits of lifetime income?
There are several benefits to having a lifetime income stream, including the following:
- You won’t outlive your income. One of the biggest concerns for retirees is running out of money. With a lifetime income stream, you can rest assured that you’ll have an income for as long as you live.
- Your payments are predictable. Unlike other retirement plans, which can fluctuate based on the stock market or other factors, lifetime income payments are fixed. This can make budgeting for retirement much easier.
- You may get a higher payout than other plans. Because annuities are based on your life expectancy, you may receive a higher payout than other retirement plans if you live longer than expected.
What are the drawbacks of lifetime income?
There are a few drawbacks to consider with lifetime income, as well:
- Your payments may be lower than other plans. If you have a shorter life expectancy, your payments may be lower than if you had invested in other retirement plans.
- You may have to pay taxes on your payments. Depending on your type of annuity, you may have to pay taxes on your payments when you start receiving them.
What are lifetime income options?
There are a few different options to consider when it comes to lifetime income:
- Single-life annuity: This type of annuity pays you an income for as long as you live. However, your beneficiaries will not receive anything if you die before the payments start.
- Joint life annuity: This type of annuity pays you and your spouse an income for as long as either of you is alive. This option is often more expensive than a single-life annuity, but it provides more security for your loved ones.
Related Reading: Life Annuity
What is a lifetime income benefit?
A lifetime income benefit is an additional feature that some annuities offer. Designed as a better alternative to annuitization, a lifetime income benefit allows you to take withdrawals from your annuity without having to give up control over your money. You can also use the lifetime income benefit to help cover retirement expenses, such as long-term care or a mortgage.
If you’re looking for a retirement plan that will provide you with a steady income for the rest of your life, consider lifetime income. Lifetime income is a type of retirement plan that can help ensure you have enough money to live on in retirement.
Use our annuity calculator to estimate your monthly payments. Contact us today for a quote and learn more about how this unique type of retirement plan can benefit you.
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