The New & Genius Ways to Generate Lifetime Income for Retirement

·4 min read
SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement
SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement

Many adults approaching retirement age have little to no retirement savings. In fact, the U.S. Government Accountability Office said that almost 50% of households headed by someone aged 55 and older had no retirement savings in 2016. And as the retirement age for Social Security rises, and inflation hits wallets across the country, it’s understandable that many older adults worry about paying for their living expenses once they retire.

To help solve this issue, one fund innovator has teamed up with the world’s fourth-largest asset manager to deliver a lifetime income generator for retirement. Annexus Retirement Solutions has created a cutting-edge retirement product that aims to provide plan participants with as much as 6% income–for life. Here’s what you need to know.

A financial advisor could help you plan for retirement and help you select investments that align with your financial goals. Speak to a qualified advisor today.

Retirement Fund Innovator Announces New Lifetime Income Solution

At the end of March 2022, Annexus Retirement Solutions announced a new, strategic partnership with the world’s fourth-largest asset manager, State Street Global Advisors, to develop a lifetime retirement income solution for defined contribution plan participants. Combining a target-date retirement fund with fixed indexed annuities and a guaranteed lifetime withdrawal benefit, the new product will be Annexus’ second product offering that leverages its patent-pending Lifetime Income Builder.

“Until Lifetime Income Builder, industry attempts to deliver in-plan lifetime income largely relied on … products that weren’t optimized to meet participants’ needs,” said Dave Paulsen, chief distribution officer for Annexus Retirement Solutions, in a press release. “That compromised approach created unnecessary complexities and required participants to sacrifice returns and a measure of flexibility and control to receive guaranteed income.”

SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement
SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement

Many retirement savers may be familiar with the popular target-date fund, usually through their employer-sponsored retirement plan. While offering a simplified, tax-advantaged retirement solution, target-date funds are still subject to the ups and downs of the markets. However, by adding fixed indexed annuities, which offer growth potential and protection from down markets, to the familiar target-date fund, plan participants will be able to benefit from a retirement solution that can accrue tax-deferred interest and offer a fixed income during retirement.

One lingering concern about this product is portability, or the ability for workers to move from one platform to another. In order to address this, Annexus provides access to its Annexus Retirement Data Exchange, which enables streamlined communication and administration between recordkeepers.

How Retirement Savers Can Take Advantage

Annexus will provide this new retirement product as part of its defined contribution plan offerings, with State Street Global Advisors providing the underlying asset management and index for the annuity portion. Most target-date funds move from a riskier asset allocation mix to fixed income solutions as the participant grows closer to retirement, and in this case, the fixed income solution would contain the Annexus embedded Lifetime Income Builder.

The company anticipates offering its annuity portion through three top-tier insurance providers to deliver lifetime income. The multi-carrier model allows the insurance providers to bid on pricing monthly, which potentially leads to lower costs and better outcomes. The fund will pay 6% income from the target-date balance high mark, and if a participant’s account balance runs out before the end of his or her life, the product includes a guaranteed 4.5% income payout for the remainder of the participant’s life.

Bottom Line

SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement
SmartAsset: Here's a New Way to Generate Lifetime Income for Retirement

Annexus Retirement Solutions has announced a new product offering in partnership with the world’s fourth-largest asset manager, State Street Global Advisors. A combination of target-date retirement fund and fixed indexed annuity, the product aims to solve America’s retirement income crisis by providing a fixed income solution for life. Payments can reach as high as 6% of the fund’s high mark, with a guarantee of 4.5% income even if the account balance reaches zero before a participant passes away. Retirement savers can rest assured that their savings will last, no matter what.

Retirement Planning Tips

  • Not sure what investments or strategies will set you up for a smooth retirement? For a solid, long-term financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Use SmartAsset’s free retirement calculator to get a good first estimate of how much money you’ll need to retire.

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