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Annuities Finance Independent & Assisted Living


In the article “Annuity can help if you outlive your nest egg,” by Steve Butler of the Contra Costa Times, the author shows how annuities can help finance your retirement through age 100 or more.  If you reach the age of 65, you have a 17% chance of living to 95 and a 5% chance of living to the ripe old age of 100.  While those aren’t huge percentages, it is a possibility that you’ll live that long and you’ll want to be able to finance that life if you are so lucky.  The author suggests working your finances backwards to ensure you have enough money to pay for life at home, then around ten years in independent living facilities and five years in an assisted living facility.

Using a combination of fixed equity indexed annuities and other annuity products, you should expect to finance $4,500 per month for independent living and $9,000 per month for assisted living after taking inflation into account.  The author assumes that we’ll all still be receiving social security payments into the future and takes that monthly income into account when determining how much money you’ll need to receive from an annuity.  By purchasing an annuity for around $200,000 at age 65, you should be able to combine those payments with social security and finance your independent living.

Once you move to the more expensive assisted living, you’ll have to access the principal and interest of another savings fund by using that to purchase another annuity product or drawing down from the fund directly.  This scenario is assuming a lot, but is a basic example of how annuities can help finance your retirement.  By saving money and using it wisely to receive the guaranteed payments that annuity products offer, you can finance even the longest of lives.  If you aren’t lucky enough to live to 100, but you’ve planned well and had the money to finance such a life, death benefits for your heirs will help them finance their lives.

Written by Rachel Summit

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