Next, the authors examine households' current annuity income--that provided by Social Security and defined benefit (DB) pension plans--and calculate the potential additional annuity income they could obtain by annuitizing
their financial (non-housing) wealth.
Additionally, while annuitizing
benefits at retirement can mitigate longevity risk, doing so also limits retirees' access to their assets.
For many, the word "annuity" itself is an incorrect correlation to annuitizing
Phil Eckman, president of Transamerica Retirement Management, a new unit of Aegon USA, said riders added to variable annuities, such as the guaranteed lifetime withdrawal benefit and guaranteed minimum withdrawal benefit, are innovations the industry developed over the past few years to address the problem of people not annuitizing
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.
Those partially annuitizing
often use other income options offered by TIAA-CREF to complement their lifetime income choice.
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.