Last updated on April 6th, 2024 at 02:39 am
Retirement might seems like an odd subject when it comes to web development, but technology advances in the last ten years have radically increased the importance of early retirement planning as well as how one can approach it.
Medical advances in the past few decades have increased life expectancy considerably. Did you know, you now have a 25% chance of living past of age of 90? “But that’s great!”, you say. Yes, unless your retirement savings don’t hold out that long. Interestingly enough, the trend of longer life expectancy is bringing back into fashion annuities as the retirement savings instrument of choice.
The Life Expectancy Trend
As mortality statistics indicate, one trend is that life expectancy is increasing due to advances in healthcare. In the past, retirees were on average not expected to live a decade past their retirement. For them, annuities were not traditionally good investment choices because, on average, an investor was not likely to live long enough for the annuity to mature.
However, although a good trend, the increased life expectancy demographics make retirement planning more difficult for someone that has recently retired. The likelihood of the average American outliving their retirement savings is become more and more of a possibility.
With this in mind, immediate fixed annuities have become a great income source for retirees. The one advantage that annuities have over all other investment options is their ability to guarantee lifetime income at a fixed, one-time cost. It’s like insurance against outliving your savings.
For example, consider someone who lives into their 80s, but retires in their late 50s. A fixed immediate annuity is a great choice for them because they will live long enough to see their investment mature, pay itself off, and protect against loss of income from other sources like social security or a tanking IRA.
Technology to the Rescue
So what does all this have to do with the internet? Luckily, technology – originally the cause of this problem of outliving one’s income – is also the solution. The internet has made it easier than ever to plan your retirement. How much do you need to invest? How early should you start? What sort of interest rates can you expect? All these questions can be answers with online calculators and quotes. For example, FreeAnnuityRates.com provides a host of cutting-edge Flash annuity calculators to help you determine exactly how much you should invest, or how much you can expect to earn, from various types of annuities: from fixed, to variable, to equity indexed annuities. Innovations like this are helping fight the uphill battle against increasing longevity.
Other Points to Consider
As an investor moves into retirement, their financial priorities will change. Their attention will turn to generating income from investments. The attitude towards risk for the investor should also change, and in general they will begin to move towards lower risk investment. Preservation of their principal is also important to retirees so that they have enough savings to last throughout their lifetime and perhaps their spouse’s lifetime.
Retirement annuities are a great potential investment vehicle to help retirees make this transition into the 21th century – where people live longer, richer, fuller, and subsequently more expensive lives – but they are not ideal for everyone. Although retirement annuities are designed to offer secure lifetime income streams, investors should carefully weigh their alternatives and consider their various pros and cons.
