Pension option combines retirement and estate planning

Can you have your cake and eat it, too? In the case of deferred income annuities, the answer may be yes.

Specifically, several companies are offering pensions on a build-your-own approach. As readers may know, a pension is a type of retirement account that generally offers fixed payments upon a person’s retirement. The latest pension offering allows an individual to make choices such as determining when the stream of payments will begin and whether the pension will be funded through a lump sum or multiple payments. In some cases, it may make sense for an individual to elect immediate dispersion, almost like a forced savings plan. In other cases, an individual may choose dispersion 10 or 20 years later.

Some deferred income annuities may pay benefits only during an individual’s lifetime, whereas others may allow an individual to designate beneficiaries that will receive any unused funds, similar to an inheritance. Called cash refund annuities, that type of product offers a way to plan for retirement and one’s heirs at the same time. An attorney that focuses on estate planning may have other insights to offer. For example, it may make sense for an individual to have a variety of different retirement products in order to ensure that funds remain for inheritances.

Notably, this trend of combining retirement and estate planning is catching on: 2013 sales totaled $2.2 billion, which is more than double the amount from 2012’s $1 billion in sales and a staggering increase from 2011’s $200 million sales total. For other ways to maximize retirement and estate planning, an individual might consider consulting with an attorney.

Source: The New York Times, “Buying a Guaranteed Retirement Income, for Some Peace of Mind,” Tara Siegel Bernard, June 6, 2014


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