The Social Security Trustees today helped promote U.S. life insurers’ new annuity guarantee products.
The trustees released a new report predicting that the Social Security trust funds will empty out in 2040, when the oldest boomers are 94 but the youngest are just 76. A year ago, the trustees were predicting the trust funds might hold out until 2041.
Meanwhile, experts say many U.S. baby boomers could have a difficult time making ends meet during their later years even if the Social Security and Medicare trust funds stay solvent until all boomers pass on.
“With Americans living longer than ever and many failing to save adequately for retirement, one of the greatest risks they face is the possibility of outliving their money,” Mark Schwarzmann, an annuities executive at a distribution unit of Ameriprise Financial Inc., Minneapolis, says in a statement about the income planning crisis.
Ameriprise’s RiverSource arm today introduced one product promoted as a tool for maintaining a steady stream of retirement income: the Guarantor Withdrawal Benefit for Life variable annuity rider.
The rider will give retirement savers the ability to withdraw up to 7% of their benefit amount every year, which will provide guaranteed income for 14 years.
Retirees who want to receive lifetime income can start withdrawing 6% of their benefit amount, or annual lifetime payment, every year beginning at age 65.
The Ameriprise RiverSource unit is charging an additional fee of 0.65 percentage points for the guaranteed withdrawal benefit rider.
Ameriprise says it will start by marketing the withdrawal guarantee rider through banks and independent broker-dealers. The company plans to make the rider available through its own financial advisors sometime this summer.
Other companies introducing annuity-based income planning products today include Jackson National Life Insurance Company, Lansing, Mich., a unit of Prudential P.L.C., London, and the Wellesley, Mass-based U.S. subsidiary of Sun Life Financial Inc., Toronto.