Financial writer reimagines — YAWN! — annuities article
What techniques can you steal from this brilliant before-and-after?
Here’s the before …
Americans Are Living Longer. Will Their Retirement Income Last as Long as They Do?
— June is Annuity Awareness Month —
Buying home insurance in case of fire, car insurance to repair a fender-bender and life insurance to protect a family’s financial well-being in the event an income-earner dies young. We’re accustomed to protecting against loss or misfortune, but we may overlook the need to protect our good fortune — such as living a long life.
Think of annuities as insurance to protect longevity. Annuities can provide valuable peace of mind for retirees: a guaranteed paycheck for life, no matter how long retirement lasts.
An annuity is a contract with an insurance company, in which premiums paid are invested to make payments back to the annuity owner, usually at a later date when income is needed in retirement. Insurers invest the premiums and pay out claims, or income payments in the case of an annuity, using the concept of risk pooling. Just as some will die young, others will live a long life. The insurer takes on the financial risks of those scenarios for the customer.
“Longevity is one of the major risks to a financially secure retirement,” says Bill Jones, financial advisor at XYZ bank. “Most people don’t believe they’ll live to age 95 or 100, so they don’t prepare for it. If you retire at age 65 and live for another 30-40 years, will you have enough money saved to pay for that?”
Advances in medicine and better nutrition mean more Americans can expect to live into their 90s or beyond. According to projections by The Society of Actuaries, one in four 65-year-old men will live to age 93 and one in four 65-year-old women will live to 96. For a couple aged 65, there’s a 25% chance that the surviving spouse lives to age 98.
Income in retirement can come from a number of sources: Social Security, pensions, personal savings like 401(k)s and IRAs and even part-time work. But there are risks to these sources providing enough income or lasting throughout retirement. Not saving enough or early enough, market declines, inflation, unexpected life events such as divorce or having to retire early due to a layoff can stunt or erode retirement nest eggs, making it difficult to cover even basic expenses over decades of retirement. An annuity can turn a portion of retirement savings into a predictable amount of income that can help retirees better plan for covering basic living expenses. That can help free up other sources of income for travel, hobbies and other pursuits enjoyed after leaving the workplace.
“An annuity can serve as one of the more stable legs of the retirement income stool,” says Linda Smith, a retirement planner at ABC Financial. “Knowing they are getting a check in their mailbox each month, year after year, for as long as they live, that gives our customers peace of mind, and frankly, more financial freedom in retirement.”
Annuities come in varieties from plain vanilla to hot fudge sundae with sprinkles. To find out if an annuity could be right for you, and which type may fit your retirement income needs, talk to your financial professional. For additional information about annuities, visit www.annuities.net.
For her revision, Marcie reorganized the piece, added human interest and examples, twisted phrases, turned numbers into things, stopped focusing on how the sausage was made and otherwise revitalized her piece.
What techniques can you steal from this after?
Live Long and Plan to Prosper
An annuity guarantees income for life, no matter how long you live
Meg Williams had just turned 45 when she watched her sweet, elderly neighbors pack their matching plaid recliners into a tiny U-Haul and reluctantly drive away for the last time from their forever home. Even with the mortgage paid off, the couple struggled to pay taxes and maintenance costs.
“That was a real wake up call for me,” says Williams, now 68 and retired. “I thought, I love my kids, but I’m pretty sure I don’t want to move in with them when I’m older.” So she sought out a financial planner, started saving more in her 401(k) and purchased a deferred annuity.
An annuity is the yin to life insurance’s yang — it can help protect you financially if you live a long life. Annuities provide something no other personal retirement account can: a guaranteed paycheck for life, no matter how long retirement lasts.
Longevity is a major risk to retirement income security, and Americans are living longer. For those currently age 65, one in four men can expect to live to age 93; and women to age 96. For couples, it’s not uncommon for one of the spouses to celebrate a 98th birthday, according to projections by The Society of Actuaries.
“The reality is that your retirement could last as many years as your career did,” says Bill Jones, a Certified Financial Planner (CFP®) at XYZ Financial. “Most people don’t believe they’ll live to 100, so they don’t prepare for it.”
Other risks such as illness, inflation, divorce, market dips or a late-career layoff can stunt or erode retirement savings, making it difficult for retirees to save enough to cover even basic expenses for two or three decades. An annuity’s guaranteed income can provide a safety net if other sources fall flat.
“If we determine this annuity will provide $1,000 a month starting at the desired future retirement date, that’s a secure source of income and one less unknown,” Jones says. Annuities are attractive to clients because they help provide certainty.
Annuity options and benefits vary, so it’s best to discuss your situation and financial goals with a retirement planner. A planner can help determine if an annuity could be right for you, and which type may fit your retirement income needs and timing, both leading up to and in retirement.
Besides guaranteed income, Williams says her annuity provides a few bonus benefits.
“Knowing I’ll get a check in my mailbox every month, year after year, for as long as I live, that gives me peace of mind,” she says. “And I won’t have to go bunk with my kids.”
How did Marcie do it? She wrote and rewrote this piece, implementing feedback from me and her classmates, as well as the techniques we talked about in class.
“The class certainly validated learning by doing for me,” Marcie says. “Applying what I learned by writing, rewriting and giving and getting input made the learning even more effective.”
She’s taken this approach back to work.
“Usually once you take a class, you forget about it days later. Not this one — I am energized about writing again! I am going to keep implementing these creative techniques, work on getting better at pre-planning my pieces and aim to better edit myself. This class made me feel more confident about my skills as a writer. That is priceless.”
Amen, Sister. Can’t see what you come up with next, Marcie!
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