Life Insurance Quotes

Calculating retirement income appropriately

10/03/11

With investment yields at historic lows, some financial advisers note that traditional retirement calculations may not return the yields that many investors have come to rely on during retirement, according to Bloomberg. Historically, retirement calculators have used an average return of about 8 percent to determine portfolio yields, but that interest rate may be over optimistic, the source notes.

Some financial advisers are lowering the expected interest rate return to as low as 5 or 6 percent, according to the source, and even optimistic advisers say expected gains are closer to 7.5 percent.

Despite the differing opinions, experts say that the important concept to keep in mind is that a lower return percentage will produce a more conservative retirement calculation, and investors simply need to be aware of their calculator's default rate. The source says that a Yahoo! financial calculator, for instance, uses an optimistic 8 percent rate of return, while other online calculators use more conservative rates.

According to the Insurance Information Institute, annuities sales in the United States saw a significant decline in 2010, falling 27 percent. Recent year-over-year figures have been more promising, with sales increases in the first two quarters.

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