The Government Accountability Office recommends adding annuity products and waiting to receive Social Security payments, according to Bloomberg’s Margaret Collins. In the article, “Delay Taking Social Security, Add Annuity to Survive Retirement, GAO Says,” Collins says that the government is looking to protect Americans against longevity risk. As we live longer, see increasing health care costs, declining home prices and financial markets, it is difficult to find the best way to finance our retirement. The GAO says that retirees should wait to take their Social Security payments until full retirement age, or later if they can. Purchasing a lifetime annuity to cover basic expenses is another recommendation from the government. While their expert doesn’t necessarily recommend annuity products for the highest-income households, they are a great way to help finance the retirement of middle-income and lower-income households who have already built up some savings.
While retirees can start receiving Social Security benefits as early as age 62 in a limited form, full benefits cannot be received until age 66. But waiting until age 70 to start receiving your benefits could essentially double your purchasing power as opposed to taking them at age 62. A recent study showed that almost half of us will live longer than our savings last. Those who buy an immediate annuity with their savings or 401k money will help guarantee that they do not run out of money in retirement. Only 6% of retirees currently transfer to a 401k annuity upon retirement, but the government hopes to overcome resistance to annuity products through increased education about their benefits. State Street and BlackRock are leading the way with 401k annuity products for retirees. Be sure to contact an expert when making any retirement planning decisions to ensure you do what is best for your individual situation.
