There was no meaningful change in annuity pricing as the new month started. A handful of carriers raised payout rates, but the majority of companies held steady. The top deferred income annuity price increased about 1% while there was no discernible change to the top immediate annuity rates.
The Value of An Income Annuity
At Blueprint Income (formerly Abaris), we are firm believers in the benefits of guaranteed income as a part of a well diversified retirement strategy. Having a portion of your recurring spending met through guaranteed income sources not only helps minimize the risk of running out of assets but also allows you to focus on living the lifestyle that you want in retirement. But you don’t have to take our word for it.
David Blanchett, the Head of Retirement Research at Morningstar, recently published this study on the impact of guaranteed income on safe withdrawal rates from portfolios. The study is fairly complicated, so if you would like a quick summary you can read this article in the Oblivious Investor.
If you don’t have time to read the articles, here are the key take-aways. In retirement, we have two goals: (1) minimizing the chance we run out of money and (2) maximizing our standard of living. If your retirement income is primarily investment based (i.e. subject to market volatility) you have to spend way more time focusing on goal one than goal two. However, when a majority of your spending is met by guaranteed income sources you can shift your focus to goal two. Blanchett finds that for those individuals who have their spending met primarily through guaranteed income sources, they can safely spend up three times as much as a person with a low level of guaranteed income.
If you are interested in determining whether an income annuity would be a good fit for your portfolio, you can reply directly to this email. Our team will discuss your spending goals, income sources and assets today to help put together a personalized recommendation on whether an income annuity would be beneficial to your strategy.