This Way to Wealth - New kid on the block

By: Alan Nadolna

In a recent article, Barron's pointed out "Folks planning for retirement want simple investments with steady income and low fees. A new type of annuity fits the bill nicely".

After all the negative press about annuities, it is refreshing to see a major financial publication recognize that they fill a prominent role in successful retirement income planning.

With pension disappearing, there are really no other sources of guaranteed lifetime income. This is a critical component in a comprehensive lifetime income plan.

The Deferred Income Annuity is a simple product that was introduced in 2011. Since that time, nine major financial institutions have introduced versions of the contract. The product is like a pension plan but you build it yourself. When you initiate a purchase, you know exactly how much you will get at various ages, whenever you turn on your income.

Deferred income annuities are also known as Personal Pension and Longevity Insurance contracts. They are issued by top rated insurance carriers, so safety is not an issue.

Here are some examples. A fifty five year old deposits $200,000 and starts income at age 65. He will receive $21,426 a year, and by age eighty five will have received $428,520, not bad since it is guaranteed.

Any retirement portfolio needs to include both guaranteed and variable return elements. Either one without the other is not going to work. For details, please contact anadolna@associatesgroupinc.com.

Alan Nadolna is a consultant to financial service organizations and is a financial advisor to corporations and individuals. He is a member of a panel of financial experts preparing This Way to Wealth. Your questions are invited by writing to Nadolna at Associates in Financial Planning, 633 Skokie Blvd., Suite 480, Northbrook, IL 60062 or call 800/428-9786 or 847/509-5090.