Ironman
Well-known member
WSJ reports how much it would cost to purchase lifetime annuities that would pay as much as Social Security:
According to ImmediateAnnuities.com, a 66-year-old man would have to pay $128,000 for an annuity providing him with income of $10,000 for life. A 66-year-old woman would have to pay even more, about $138,000.
That's for an income of $10,000 a year. If you think you'll need $40,000 a year to live on, naturally you'd need to set aside four times as much, or about $550,000.
And this would only be for a straight annuity, with absolutely no inflation protection at all.
Few life insurers provide inflation-protected annuities. New York Life offers something close: an annuity that increases payments by a certain percentage each year. This won't protect you from runaway inflation. But at least an annual increase of, say, 3% will give you some cushion.
I asked the company how much a 66-year-old would have to pay for an annuity paying $10,000 a year, with a 3% annual increase.
The answer? About $180,000. It's about the same for men and women.
Right now, the average retiree is getting about $14,000 a year from Social Security. To buy a similar income stream on the open market, a 66-year-old would have to pay about $250,000. Someone getting the maximum benefit, $28,000 a year, would need to pay about $500,000.
According to the most recent survey by the Employee Benefits Research Institute, a think tank specializing in the topic, fewer than half of workers have even saved $25,000, and only a third have saved as much as $50,000. Forty-four percent have saved less than $10,000, and a quarter have basically saved nothing at all.
http://online.wsj.com/article/SB100...890972991846.html?mod=WSJ_PersonalFinance_PF5
According to ImmediateAnnuities.com, a 66-year-old man would have to pay $128,000 for an annuity providing him with income of $10,000 for life. A 66-year-old woman would have to pay even more, about $138,000.
That's for an income of $10,000 a year. If you think you'll need $40,000 a year to live on, naturally you'd need to set aside four times as much, or about $550,000.
And this would only be for a straight annuity, with absolutely no inflation protection at all.
Few life insurers provide inflation-protected annuities. New York Life offers something close: an annuity that increases payments by a certain percentage each year. This won't protect you from runaway inflation. But at least an annual increase of, say, 3% will give you some cushion.
I asked the company how much a 66-year-old would have to pay for an annuity paying $10,000 a year, with a 3% annual increase.
The answer? About $180,000. It's about the same for men and women.
Right now, the average retiree is getting about $14,000 a year from Social Security. To buy a similar income stream on the open market, a 66-year-old would have to pay about $250,000. Someone getting the maximum benefit, $28,000 a year, would need to pay about $500,000.
According to the most recent survey by the Employee Benefits Research Institute, a think tank specializing in the topic, fewer than half of workers have even saved $25,000, and only a third have saved as much as $50,000. Forty-four percent have saved less than $10,000, and a quarter have basically saved nothing at all.
http://online.wsj.com/article/SB100...890972991846.html?mod=WSJ_PersonalFinance_PF5