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NAVA: SPIAs Increase Bequests

By Staff Writer

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Adding a single-premium immediate annuity to a retirement portfolio can increase income and wealth, according to an annuity industry trade group.

Researchers at Milliman Inc., Seattle, have performed an actuarial analysis that shows that including a SPIA in retirement arrangements can increase one typical middle-income couple’s chance of meeting its retirement income goal to as high as 95%, from 77%, according to NAVA, Reston, Va., which commissioned the analysis.

That couple might leave $1.3 million behind after both spouses died, compared with a bequest of $945,000 if the couple had no SPIA, NAVA says.

The couple in that scenario includes 2 65-year-old spouses with $500,000 in available retirement assets, a total post-retirement income goal of $50,000 per year that increases by 2.5%, and $30,000 in annual Social Security income, NAVA says.

The actuaries who performed the analysis assumed the couple would spend about 31 years in retirement.