Download The Findit App

Share Your Posts On These Major Social Networks

Instatag Your Posts to Instagram Facebook + Twitter

News

Bonds Have Interest Rates, Stocks their Dividends, Annuities Longevity Credits

Mortality Credits the New Alpha

Mesa 12/17/2019 2:00:00 PM

There is no other investment or savings funding tool that can guarantee lifetime income except annuities. As an individual the average male lives 86.6 years and the average female lives 88.8 years. The surviving spouse in a marriage averages living to age 93.  87% of the time the surviving spouse is a female. Half of all Americans will live longer than those averages.  If the surviving spouse average is age 93 that’s 31 years from age 62 which is the starting age for many guaranteed lifetime annuities. So the average internal rate of return for lifetime annuities is benchmarked at age 62 for 31 years. Those returns could be somewhere around 3% net of all product expense loads. It could be 4%+  if those at age 93 live to age 100. How can annuity manufacturers guarantee lifetime income? The answer is mortality credits.

The theory uses the law of large numbers and those who don’t survive the averages are credited to those who did survive the averages. Mortality credits are not correlated to the market returns like those of bonds and their credited interest or stocks and their dividends earnings. They’re based on surviving the odds. If Jeanne Calment owned a guaranteed lifetime annuity, every day past her 79th birthday was beating the bank or in this case, the insurance company who issued the policy. That’s 43 years beyond the actuarial mortality projection. Had she owned an annuity, the rate of return would have been staggering. At that time annuity carriers were paying significant returns on the basis of high interest rates.

Let’s say that five women formed an investment club. In addition to their investments they decide to put aside $100 each into a box and seal it until a year has lapsed. But during that year, one of the investment club members died. The surviving four women split the money up 4 ways and experienced a 25% return, each receiving $125. There was no market risk, just mortality credits. Guaranteed lifetime annuities take the longevity risk off the table, but for those living past the averages it pays a great return. And one last point: if the guaranteed lifetime annuity is non-qualified, the original basis comes out tax-free and partially FIFO (first in first out.) You have guaranteed bills forever in retirement that should be paid by guaranteed income and not the potential of market returns.

More News

https://s3.amazonaws.com/findit-pictures/304618/15cbd0ce-653d-42fe-904b-60b160b30688.jpg

Risk & Reward: Everyone Has Some Threshold of Financial Pain

Most people have a predisposition about risk. It’s generally environmental and based on family upbringing. That doesn’t mean it’s necessarily right, it’s just where you are, depending upon your financial literacy. Whether you know it or not, you ...

Released On: 12/27/2019
Views: 1742

https://s3.amazonaws.com/findit-pictures/304618/5c11d9a2-2454-420f-bb42-7d9f0e9c7763.jpg

Establish Your Financial Timeline Based On Approximating Your Life Span

There are mortality averages based on actuarial statistics that can approximate the life expectancy of the general population at large. But “averages” don’t address half of those who will exceed the norms. The more data you put into determining y ...

Released On: 12/26/2019
Views: 1703

https://s3.amazonaws.com/findit-pictures/304618/2daf071e-f113-44d4-ac16-5fc18b17a4e4.jpg

You Can’t Make Good Financial Decisions Without Knowing Your Effective Tax Bracket

For most wage earners and retirees taxes are the biggest expense they’ll ever have over their lifetime. Managing your tax bill effectively is learning to become a “gamer,” by avoiding tax traps and snares along life’s journey. You have to know th ...

Released On: 12/25/2019
Views: 1623

https://s3.amazonaws.com/findit-pictures/304618/225d9f5d-44e6-4e13-b3ee-c07900ef43f0.jpg

Baby Boomers Must Create a Retirement Budget or Risk Losing Control of their Money

It’s rather stunning to discover that most baby boomers have never had a budget in their life, but they’re going to need one in retirement. Retirement may be the biggest motivator for most Americans to create a budget because retirees live month ...

Released On: 12/24/2019
Views: 1720

https://s3.amazonaws.com/findit-pictures/304618/11103acb-9d7e-46de-afaa-81db9a26dd89.jpg

Life Has Milestone Events That Have A Financial Impact

Life just happens, but there are predictable events common to most in our culture and most of those events have a financial impact. Planning for those predictable events can prepare you to meet many of these obligations. The life event checklist ...

Released On: 12/23/2019
Views: 1793

https://s3.amazonaws.com/findit-pictures/304618/32f77340-ae1d-42d4-88d7-222f83292aad.jpg

The Extension of Human Life Expectancy: The Final Frontier of Retirement Planning

The Mortality Revolution may very well be the final frontier in mankind’s quest to beat death. So far, the grim reaper has won every time, but new timelines are emerging in human longevity that are delaying the inevitable. Prepare yourself for l ...

Released On: 12/20/2019
Views: 1603

https://s3.amazonaws.com/findit-pictures/304618/99f307a7-8aeb-4972-bfbf-69d62336bb9b.jpg

Longevity Risk is its Own Risk Multiplier of Every Other Retirement Risk

Living longer is exacerbating over a dozen other retirement risks that threaten the vast majority of retirees and those near retirement. If the status quo continues, the retirement lifestyle of most seniors will be severely pared back. Watch the ...

Released On: 12/19/2019
Views: 1671

https://s3.amazonaws.com/findit-pictures/304618/b1bdcb96-7415-499f-ba7a-36c65b92ee87.jpg

Almost All Retirement Plans Need Serious Updating in Light of the Mortality Revolution

Most of the retirement plans currently operational have a significant flaw. They’ve grossly underestimated the increase in life expectancy over the last generation. But government and military pensions are in the greater financial jeopardy, becau ...

Released On: 12/18/2019
Views: 1636

https://s3.amazonaws.com/findit-pictures/304618/e64bac33-4257-4124-bcea-41317cc82cd6.jpg

Bonds Have Interest Rates, Stocks their Dividends, Annuities Longevity Credits

The law of large numbers and changing demographics of life expectancy is having a significant impact on guaranteed lifetime annuities. Annuity manufacturers are touting their alpha with mortality credits and receiving newfound interest among fina ...

Released On: 12/17/2019
Views: 1637

https://s3.amazonaws.com/findit-pictures/304618/0758fe7d-25a8-4eae-9ce9-e7ca90b52e0b.jpg

Shock! The Age Wave is Upon Us and We’re Not Ready

The last 100 years have seen a significant increase in human longevity compared to the earliest records of mankind. The spike in longevity has caught the Western world by surprise. The effects of this revolution are affecting financial planning a ...

Released On: 12/16/2019
Views: 1607

https://s3.amazonaws.com/findit-pictures/304618/c92a8a0b-8492-4325-b6d4-530642b4667f.jpg

Protecting Social Security Benefits from Taxation

There was a time when Social Security benefits were not exposed to ordinary income taxation. But over the years, small incremental steps were taken to tax the benefits. Maybe “means testing” may be implemented to shore up the vulnerable Social Se ...

Released On: 12/13/2019
Views: 1303

https://s3.amazonaws.com/findit-pictures/304618/369c956a-4a3d-4960-8a83-f992bc8b0b97.jpg

Collateralized Loans from Cash Value Life Insurance Policies & Home Equity Could Be Tax Free

Collateralized loans are not characterized as income and are not reportable, as such, on your 1040 form. And because these loans are not forms of taxable income, they are not counted for the provisional income test for Social Security taxation. W ...

Released On: 12/12/2019
Views: 1765

https://s3.amazonaws.com/findit-pictures/304618/1ba4827b-5a3c-4987-a478-0f09471640b2.jpg

Tax Management in Retirement Requires Tax Management During the Contribution Period

Retirement, as it is today, is inherently crippled by taxes. You may very well have one million dollars in your retirement plan, but Uncle Sam may own up to 40% of it. Health Savings Accounts (HSA) and Roth IRAs need to be reconsidered as a first ...

Released On: 12/11/2019
Views: 1578

https://s3.amazonaws.com/findit-pictures/304618/13faf649-2308-49d3-948d-a7f19e8064d7.jpg

Taxes in Retirement is the #1 Threat in Retirement Cash Flow

Most American workers don’t comprehend the realities of retirement until they’re a few years from retirement date, which is often too late. They’re just too busy dealing with immediate financial pressures to understand the long-haul consequences ...

Released On: 12/10/2019
Views: 1605

https://s3.amazonaws.com/findit-pictures/304618/24e22fdc-181b-40c9-8fc5-7d6bb4855405.jpg

Retirement Facts, Stats and Hacks for the Next Generation

Retirement will undergo a drastic reinvention as the newest generation redefines it's golden years in their investment habits and senior lifestyle goals. https://www.youtube.com/watch?v=RAdtMWBaseY&feature=youtu.be

Released On: 12/9/2019
Views: 1551

https://s3.amazonaws.com/findit-pictures/304618/3d46241d-4d89-4874-a7fa-5a604f1912c4.jpg

Uncle Sam Owns a Chunk of Your Retirement Accounts

Your retirement account is only as big as your tax planning strategy. Your personal exemptions and standard deductions in retirement will not be enough to offset your tax bill. Tax management must be a major component of your retirement plan. Wat ...

Released On: 12/6/2019
Views: 1668

https://s3.amazonaws.com/findit-pictures/304618/8a315712-71ea-4ca2-a116-f4e41d6c5ed3.jpg

Guaranteed Income You Can’t Outlive Can Mitigate Market & Longevity Risk

If you have longevity in your family, guaranteed income for life is a must consideration. If you think it’s reasonable that medical advances will impact your longevity, then guaranteed income for life may need to be in your retirement plan. Watch ...

Released On: 12/5/2019
Views: 1519

https://s3.amazonaws.com/findit-pictures/304618/d5d6ff6d-c69b-4aed-8d08-c0759001e726.jpg

How to Retire Happy

A happy retirement is based on math and science, not on wishful thinking and hoping things turn out right. You need to eliminate debt and risk in retirement and secure reliable income to generate the peace of mind that seniors desire in their gol ...

Released On: 12/4/2019
Views: 1264

Load More wait

Map

LifeSize Solutions, LLC

Get Directions

LifeSize Solutions, LLC

  • 236 N Country Club Dr #2
    Mesa, Arizona 85201
    United States
  • 5202614599
  • 8:00am to 5:00pm Mountain Time