Lifetime Joint Income Payments
It is important for most retirees to create additional income streams in addition to social security in retirement. Many will rely on minimum distributions from qualified accounts (IRA’s, 401K rollovers, SEP plans, etc) and non qualified retirement plans to create additional income. Lifetime Joint Income Payments offer the security of an additional source of income.
Retired couples will often only have one person receiving additional income.
This strategy works well as long as the primary person drawing income is alive but an unplanned death can leave the surviving spouse short on income.
If the deceased spouse had substantial amounts of life insurance or other investments:
the surviving spouse can use the proceeds to create their own income stream. Unfortunately, the odds are that the deceased spouse would not have an adequate amount of life insurance to allow for a new income stream to be created.
Using a joint income option is a great way to protect both members of the couple in the event the other passes away.
There are now a number of companies that provide very strong payout options:
Most will offer guaranteed income numbers that will increase in the deferral phase prior to turning income on. The payment will not expire until the death of both members.
A number of companies offer joint payouts and the highest paying company changes often. The current leader in this type of contract is Security Benefit. They currently offer the highest single and joint payout in the field.
We will use a 61 year old male and his 61 year old wife as an example. Assume they have saved up $200,000 to supplement retirement.
If they defer the money for 5 years:
Security Benefit will pay them a Joint lifetime income of $16.186.00 a year guaranteed. This represents over an 8% joint payout percentage. If the defer for 7 years, the income would go up to $20,000 a year putting the payout at 10%.All payouts are projected on a guaranteed basis making it easy to plan for future income needs.
There is no doubt that a new company will counter with a higher payout at some point but for now, Security Benefit is the clear leader.