Should Annuities Provide Your Retirement Paycheck 

In the next decade, tens of millions of American adults born after World War II will retire. 

One challenge faced by these new retirees is how to draw down retirement savings without knowing exactly how long they will live. 

 What sort of spending they might engage in during their retirement, and what market returns they might realize, in the meantime should they manage assets themselves.

The shift from defined benefit plans (which typically allow for a lifetime pension) to defined contribution plans (which do not have pensions built into them) places responsibility on a growing number of consumers to make complex decisions concerning decrease of their retirement savings.

 Given how challenging most individuals find saving and planning for retirement, and given that facility with numbers declines with age, it is no wonder that most retirees experience difficulty figuring out how to manage their assets and spending after retirement. 

Meanwhile, ensuring lifetime income has never been more important, as life expectancy has been increasing over time.

Meanwhile, ensuring lifetime income has never been more important, as life expectancy has been increasing over time.

The average 65-year-old American can expect to live for approximately 19 more years.


1. Brown, J. Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning. (2007). doi:10.3386/w13537

2. Goldstein, D. G., Johnson, E. J. & Sharpe, W. F. Choosing Outcomes versus Choosing Products: Consumer-Focused Retirement Investment

Advice. J. Consum. Res. 35, 440–456 (2008).

3. Sumit Agarwal, John C. Driscoll, Xavier Gabaix & David Laibson. The Age of Reason: Financial Decisions over the Life Cycle and Implications

for Regulation. Brookings Pap. Econ. Act. 2009, 51–117 (2009).

4. Kochanek, K. D., Murphy, S., Xu, J. & Arias, E. Mortality in the United States, 2016. NCHS Data Brief 1–8 (2017).

Fixed annuities a guaranteed stream of lifetime income

Fixed annuities were created to provide a guaranteed stream of lifetimeincome, similar to a pension, and/or a competitive fixed rate of return without putting initial principal at risk.

The most common types of fixed annuities are

listed below, along with a brief description of each. 

we will review examples and more specific definitions of each type of annuity.

Single Premium Immediate Annuity (SPIA)

A single premium immediate annuity provides a fixed income stream, usually within

30 days, in exchange for a premium payment.

Payments can last for a fixed number of years, for your entire life or a combination of both.

Deferred Income Annuity (DIA)

A deferred income annuity provides similar benefits to a “SPIA”, but payments do

not start for at least 30 days and can be delayed up to several years. Payments can last for a fixed number of years, for your entire life or a combination of both.

Fixed or Declared Rate Annuity (FA)

A fixed or declared rate annuity credits interest based on current returns of an insurance companies bond portfolio, without direct investment in the market.

There is a first year declared rate, followed by annual credits based on current performance

Multi-Year Guaranteed Annuity (MYGA)

A multi-year guarantee annuity provides a stated interest rate each year for the entire contract term, generally 5-10 years. Unlike savings products sold at banks, taxes on interest are deferred until withdrawals are made.

Fixed or Equity Index Annuity (FIA)

A fixed index annuity provides interest credits based on the movement of a specific index, without direct investment or risk of lost due to market volatility.

It can also include lifetime income and death benefit guarantees

Jarvis Financial Inc. provides this basic overview for informational purposes only.

You are encouraged to consult your financial advisor, tax professional and/or attorney prior to making any financial decisions or purchasing an annuity for retirement income planning.

Retirement funds dwindling With traditional safety nets such as company pensions, and retirement funds dwindling, many of the 78 million baby boomers are left trying to answer one question: “Who’s going to pay my retirement paycheck?”

Annuities are one investment that more and more retirees are considering

Annuities are one investment that more and more retirees are considering. These financial products are created by the insurance industry, and offer a lot more advantages over other investments such as, flexibility, safety, and growth.

Here are a few reasons why you should think about adding them to your retirement portfolio:

  •   Monthly Paychecks and paychecks
  •   A Safer Investment
  •   Income for Life
  •   Market Gains without Losses
  •   Protection of Principal

At Jarvis Financial Inc. we will take the time to sit down and explain, educate and arm you with the knowledge you need to truly understand the rules of the Annuity game.

We would be glad to provide you with more information on annuities and how they can help you in retirement, click here for your FREE annuity comparison. 

All of our advisors are licensed and registered with the Florida Department of Financial Services. We have over 20 years experience and are dedicated to what we do.

As independent financial advisors, our advantage to you is that we offer products and services from a wide range of highly rated financial companies. We’re not limited or restricted to one company’s products and services, or swayed by a sales manager telling us what to sell. Therefore, our interests are completely aligned with our clients’ goals, we advise under a fiduciary standard, which means we’re committed to doing what’s in your best interest, as our client.Our process involves discovering your unique values, goals and interests and then finding compatible solutions for your financial plan. From there we monitor your progress and commit ourselves to providing you with outstanding service! Together we can explore the options available to you in the pursuit of your financial goals. We think you will appreciate the trust and confidence that comes from working with a leading independent advisor.