"There's always going to be an agent out there hunting for a commission that's going to show you why his product is so much better than the one you have," Voudrie said, noting a possible reason why people aren't annuitizing
. "It's just a way to milk more money out of the same customers," he said.
So the risk of not annuitizing
grows as people get olden The probability of a single life male pensioner outliving assets taking an income of 80 percent of the annuity income increases from 20 percent at age 65 to 36 percent at age 85.
Under this arrangement, G can make a single deposit today that will guarantee her a lifetime annuity, beginning in seven years, of no less than the same $155,000 she would receive from annuitizing
the amount due under her husband's annuity guaranteed death benefit.
(You can avoid this dilemma by annuitizing
a private pension, but since annuity-purchasers tend to live longer, insurance companies charge a steep premium for this service.) Also, under a privatized system, two workers who earned the same average wages over their careers and invested the exact same way could have very different pensions.
See also: Top 10 annuity sales leaders 17 unexpected expenses in retirement What women want: Annuitizing
Paying tax on the gain in the annuity and reinvesting the net proceeds in a taxable account seems to be a better option than annuitizing
The Dietrich Pension Risk Transfer Index, which tracks the relative attractiveness of annuitizing
pension liabilities, declined significantly this summer over the span of one month.
Instead, Polkinghorn expects people will come to see the value of annuitizing
for a period-certain and life, in which the periodic payments continue for a guaranteed period but also continue should the annuitant live longer than his or her life expectancy, as half will.
Advisors with clients who are thinking about annuitizing
a portion of their IRAs should make this clear before the clients act.