The easiest, surest way to increase your retirement income is to shop for annuities just as you would for anything else. Few retirees or prospective retirees do this, but I’ve shown over the years shopping will increase income.
Insurers and other annuity payers use different assumptions to determine their payouts. They consider estimated investment returns (and recent investment losses), their own life expectancy tables, and their annual expenses and desired profit margin. Each of these varies between insurers. Many insurers count on consumers not to shop around.
Financial stability also makes a difference. Insurers with better financial positions can pay less because of the increased security they offer.
An easy way to shop is to visit web sites, such as www.immediateannuities.com. Type in your age, state of residence, and the amount you want to invest in an annuity. After providing some personal information, you’ll receive a report showing the payouts you’d receive from different insurers.
Consider a male aged 60 who wants to put $100,000 in an annuity that will pay monthly income for life with no term certain and no payouts to beneficiaries. From 13 insurers checked by www.immediateannuities.com, the highest monthly payout recently was $589 monthly from Presidential Life Ins. Co. and the lowest was $533 from Midland National. The $56 difference may not seem like much, but it is 10.51% more per month, every month. It comes to $672 annually – more than one month’s payout.
If you are willing to consider insurers with lower financial ratings, the difference is greater. Often there is a payout difference of 20% or more.
Shop around before buying an annuity. If your retirement plan offers an annuity, compare it to commercial annuities before deciding.