Instead of turning the public against annuities in class warfare, policymakers can emphasize the benefits of annuities and make them a prime part of the solution for retirees dealing with income fears, writes Stan The Annuity Man.
In a previous article I wrote, The Politics of Annuities, I explained how the politicians in Washington have their greedy eyes on the trillions of dollars of annuities already on the books. A few states (California, Nevada) have already instituted a premium tax on income taken from annuities.
As usual, Washington misses the common-sense points on how Americans can prepare for retirement by implementing annuities into their overall financial plan. Politicians always revert back to the tried and true “class envy” card, instead of educating the public on how to achieve the financial independence that Americans instinctively strive for.
Tom Harkin, ranking Democrat member and Chairman of the US Senate Committee on Health, Education, Labor, and Pensions, just released a study called The Retirement Crisis and a Plan to Solve It. A lot of money and time was spent on this study, and some of the findings were shocking. Below are just a few statistics that are surprising, to say the least:
- In 2010, nearly 6 million Americans over age 65 were living in poverty
- Half of all Americans have less than $10,000 in savings
- Just 1 in 5 “working Americans” (their words, not mine!....FYI, I hate that slogan) will get a pension-type income during retirment
- 1.5 million Americans over the age of 50 lost their homes to foreclosure between 2007 and 2011
- Half of the households between the ages of 65 and 74 have no retirement savings
- Only 14% of Americans think they will have enough money for retirement
Harkin, in true liberal fashion, offers remedies that most of the “producers” would disagree with because the government is too involved. The solutions offered are mostly a socialistic “redistribute the wealth” utopian dream.
However, he did get one point right: That is, the importance of allocating assets to provide a lifetime income stream upon retirement.
If you are fortunate enough to be one of the few Americans with a pension, let me offer my congratulations. The typical pension (defined benefit plan) is now a dinosaur that has been replaced by the 401k (defined contribution plan). Most 401ks don’t offer a lifetime income option (which is/was the beauty of a pension), and people with 401ks usually shoulder all of the risk of the markets as they plod toward retirement.
The majority of us (including Stan The Annuity Man) have to plan for their own retirement income stream. If Social Security payments are still around, then great, but that program was never put in place to fully cover your retirement needs.
I am not planning on that governmental giveaway, so like you my primary focus is building my lifetime income stream portfolio. And if you didn’t know by now, annuities are the only product that guarantees a lifetime income stream and the peace of mind of never outliving your money.
So I’m going to pretend that Senator Harkin has brought in Stan The Annuity Man to help educate the public and Congress on the best way to create a lifetime income stream using annuties. The C-Span cameras are rolling and Stan The Annuity Man is in the Senate chamber answering questions. I’m sitting at the table alone as the sole annuity expert:
Senator Harkin: Stan The Annuity Man, since you are the recognized expert in America on annuities, how would you explain in “simple terms” to the voting public how they should plan for future income?
Stan The Annuity Man: Senator Harkin, there are two types on income plans using annuities, "Income Now" and "Income Later." Both annuity strategies are pure “transfer of risk” plans, and both are contractually guaranteed to pay for life.