Academy’s Life, Retirement Councils Provide Essential Information for Lifetime Income Security

By William Applegate and Amanda Barry-Moilanen, Policy Project Managers 

There are few things that are certain in life. One is that your life at some point will end and another is that living is expensive.  

These two facts highlight the value and need for lifetime income. What is lifetime income? Lifetime Income is the money you receive to cover expenses in retirement. However, retirement is also not always voluntary nor is it always possible for every individual to adequately plan for it. Sometimes people are forced to retire due to health, family, or larger economic reasons without much of an income. Uncertainty abounds, which makes needing to understand what impacts lifetime income even more relevant to ensuring a good quality of life. 

In the retirement policy world, many note that a secure retirement relies on a three-legged stool—public programs (such as Social Security), personal savings (including employer sponsored plans), and benefit plans (such as pensions and employer matches to 401k). Hoping to get by on just Social Security, as too many Americans do, doesn’t make for a robust enough plan.   

The Academy’s Retirement Policy Council (RPC) focuses a lot on what large systems, like private and public pension plans—in addition to Social Security and other retirement policy matters—can do to aid people’s retirement. Recent work includes a perspective on public pension buyouts, adverse policy outcomes, and an upcoming webinar on Feb. 26 looking at collective defined contribution (CDC) plans. These publications review challenges and possibilities in improving retirement outcomes. 

But lifetime income is not just the traditional retirement products—it also includes life insurance and annuity products. Life insurance products offer more than just death benefits; they can be financial tools intended to offer an income stream for individuals after retirement  

One life insurance product that consumers may not be as familiar with is annuities. Annuities are intended to provide payments from retirement until death, or another time period selected by the policyholder, and may offer other benefits as well depending on the product. The Academy’s Retirement and Life Practice Councils (LPC) have published several resources related to annuities and the role they play in accumulating and preserving lifetime income.  

For example, What Are Various Types of Insured Annuities? offers a detailed comparison of the various types of annuities, including their premium payment schedules, their payout schedules, and various other risk considerations. A Review of Qualifying Longevity Annuity Contracts (QLAC) provides a thorough examination of QLACs which are deferred income annuities that are offered within a tax-qualified retirement accounts, offering another avenue for lifetime income to folks nearing retirement who may not have sufficient assets to cover their retirement. Meanwhile, Adding Annuity Options to Defined Contribution Plans discusses annuity products that may be available to be added to defined contribution plans (which are traditional retirement accounts).  

Annuity policies are meant to positively impact income security in an individual’s later years, offering an income stream that can offer some protections or even product-specific security against rising costs.   

The challenges of secure retirement income impact nearly every American—no matter what their individual financial situation may be. There are tools available to help grow and protect lifetime income in both the retirement and life insurance spaces. Often, they can work together to offer security in a time of life where risk tolerance may be lower. Both the RPC and LPC continue to engage with policymakers and other stakeholders on issues that relate to lifetime income, which will continue to be highlighted and shared on the Academy’s website and in our various newsletters and social media.