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GAO encourages annuities, social security deferrment

09/20/11

The Government Accountability Office recently released a report encouraging senior citizens to explore annuities options, as many seniors are living longer than their financial planning accounts for, and traditional social security and pension benefits may not be enough to cover costs as people age, Annuity News Journal reports.

The report notes that by postponing social security benefits until age 66, a senior citizen can increase his or her social security benefit by 33 percent, an increased benefit that may help cover costs in the event that a person outlives his or her pension. The GAO also noted that by investing in annuities or converting a defined benefit pension into an annuity, seniors can stretch their money further.

By converting a defined benefit pension plan to an annuity, seniors can guarantee payments for the rest of their lives, although some annuities plans will die with them, and premature death can result in the loss of funds.

According to the source, the GAO's recommendations are complex, and converting pensions is a process that is best made with the assistance of a financial advisor.

A 2010 LIMRA study found that many Americans who may need life insurance, annuities or other financial planning coverage admit that they are under-informed. Almost 80 percent of households do not have a personal life insurance agent or broker. 

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