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Why variable payments?

Variable annuitization has existed for decades, yet reliable educational resources remain surprisingly limited. We've brought together academic research, insurer materials, product comparisons, prospectuses, and fiduciary guidance in one place to help retirees understand one of the most overlooked retirement income strategies available today.

Why Annuitize?

Retirement changes the objective of investing. The goal is no longer simply to accumulate wealth—it is to convert wealth into dependable income that can support your lifestyle for the rest of your life. As economist and Nobel laureate Robert C. Merton observed:

"Our approach to saving is all wrong: We need to think about monthly income, not net worth."

The questions below explore why economists, actuaries, and retirement researchers have studied lifetime income for decades and why it remains one of retirement's most important—and most misunderstood—financial decisions.

Why do so few retirees choose lifetime income?

In his 1985 Nobel Prize Lecture, Franco Modigliani observed:

"It is a well-known fact that annuity contracts, other than in the form of group insurance through pension systems, are extremely rare. Why this should be so is a subject of considerable current interest. It is still ill-understood."

Nearly forty years later, economists continue to refer to this question as the Annuitization Puzzle. Research suggests the answer lies not only in mathematics, but also in human behavior, liquidity preferences, legacy goals, and the way retirement decisions are framed.

Understand the Annuitization Puzzle →

Can investment returns alone fund a lifetime retirement?

Investment portfolios generate dividends, interest, and capital appreciation, but they cannot create mortality credits—the additional economic value produced when longevity risk is pooled among retirees. Understanding this "missing return" helps explain why lifetime income is fundamentally different from a traditional withdrawal strategy.

Discover the Missing Return →

Why have economists supported lifetime income for decades?

Beginning with Yaari's landmark research and continuing through the work of Nobel Prize-winning economists, decades of research have shown how guaranteed lifetime income can improve retirement efficiency by addressing longevity risk. Modern retirement economics increasingly focuses on sustainable lifetime spending rather than wealth accumulation alone.

Review the Economic Research →

How can you protect purchasing power throughout retirement?

Retirement may last thirty years or longer, making inflation and rising healthcare costs among the greatest threats to future spending power. Professionally managed variable lifetime income seeks to combine guaranteed lifetime payments with continued participation in the capital markets, providing the opportunity for income to grow over time.

Protect Purchasing Power →

Can you annuitize and still leave a legacy?

Many retirees assume they must choose between lifetime income and leaving an inheritance. Research suggests that thoughtful retirement income planning can balance guaranteed income, investment flexibility, liquidity, and legacy objectives rather than treating them as competing priorities.

Balance Income and Legacy →

How are advisory variable annuities different?

Today's advisory variable annuities differ significantly from many traditional products. Institutional investment share classes, transparent pricing, fiduciary portfolio management, and the absence of surrender charges have reshaped how lifetime variable income can be integrated into a comprehensive retirement strategy.

Compare Advisory Variable Annuities →

What does this mean for my retirement?

No study concludes that everyone should annuitize, and no single strategy is appropriate for every retiree. The more important questions are whether lifetime income belongs in your retirement plan, how much to annuitize, when to begin, and how it integrates with your investments, taxes, healthcare planning, and legacy goals.

As Robert C. Merton explains, retirement is about "trading money when you don't need it for money as long as you do need it." Understanding that shift in perspective may be the most important retirement decision of all.

Continue to Choosing an Insurance Company →

Research
Introduction

The Industry Changed

Today's annuity market looks very different than it did twenty years ago. Most variable annuities are now designed for accumulation rather than annuitization.

Read more →

Guaranteed Lifetime Withdrawal Benefits (GLWBs) became the industry's dominant retirement income feature by preserving account ownership while providing fixed withdrawal guarantees. As a result, many contract owners never elect traditional annuitization, even though variable lifetime income remains available. The popularity of living benefit riders has fundamentally changed how retirees use variable annuities.

But for more than seventy years, economists, actuaries, investment professionals, and retirement researchers have examined one of retirement's most important questions: How can retirees convert accumulated wealth into sustainable lifetime income?

The research spans economics, finance, actuarial science, behavioral psychology, healthcare, and capital markets. Together, these disciplines provide a deeper understanding of longevity risk, retirement spending, and the role guaranteed lifetime income can play in long-term financial security.

Yaari's Lifetime Consumption Model

Economist Menahem Yaari fundamentally changed retirement economics by demonstrating that, absent a desire to leave a bequest, retirees seeking to maximize lifetime consumption would fully annuitize their retirement wealth because lifetime income eliminates longevity risk.

The Annuitization Puzzle

If economic theory supports lifetime income, why do relatively few retirees choose it?

Nearly four decades after Franco Modigliani highlighted this question in his Nobel lecture, economists continue to study what became known as the Annuitization Puzzle. Research suggests the answer involves far more than mathematics, encompassing liquidity preferences, behavioral biases, legacy objectives, health uncertainty, product design, and financial advice.

Nobel Prize Research

From Harry Markowitz's later reflections on the "game of life" to the work of William Sharpe, Robert Merton, Franco Modigliani, Paul Samuelson, and Peter Diamond, Nobel Prize-winning economists have consistently emphasized that retirement presents challenges beyond investment management alone, including longevity protection and sustainable lifetime spending.

Robert Merton and Retirement Income

Robert C. Merton has argued that retirement planning should begin with the income people need rather than the wealth they accumulate. His work reframed retirement as a liability-matching problem—designing dependable future income instead of simply maximizing investment returns.

The Behavioral Side of Retirement
The decision to annuitize is emotional as well as financial. Research shows that many retirees naturally value flexibility, liquidity, and control—even when guaranteed income may improve long-term outcomes.

Behavioral economists have identified recurring influences including loss aversion, the desire to maintain ownership of accumulated assets, underestimating longevity, present bias, and the tendency to focus on leaving principal to heirs. These are normal human preferences, not financial mistakes, but they often discourage lifetime income decisions.

Building Wealth vs. Spending Wealth

Modern Portfolio Theory transformed wealth accumulation. Retirement introduces a different challenge: converting accumulated assets into dependable income while managing longevity, inflation, and sequence-of-returns risk.

Healthcare Inflation

Long retirements expose retirees to decades of healthcare inflation. Research from healthcare economists and actuaries underscores the importance of retirement income strategies that can adapt as spending needs evolve.

Capital Market Assumptions

Long-term capital market assumptions published by institutional investment firms provide useful benchmarks for evaluating investment return expectations, inflation assumptions, and Assumed Interest Rate (AIR) decisions within variable lifetime income strategies.

Federal Reserve Household Wealth

Federal Reserve data show that variable annuities represent a significant portion of household retirement assets. Understanding where these assets fit within household balance sheets provides valuable context for evaluating their role in retirement income planning.

### Advice Influences Outcomes

How retirement advice is delivered can influence which strategies receive the most attention. Incentives and business models matter.

Traditional assets-under-management relationships are designed around managing investment portfolios. Because annuitization converts retirement assets into lifetime income, few advisory firms have developed specialized expertise in designing and managing annuitized income strategies. As fee-based annuity models continue to evolve, retirees have access to a broader range of fiduciary retirement income solutions.

Federal Reserve Household Wealth

Federal Reserve data illustrate the significant role variable annuities play in household balance sheets, representing trillions of dollars invested through life insurance company separate accounts and retirement annuity reserves.

Bringing the Research Together

Taken together, decades of economic theory, actuarial science, behavioral research, and retirement income studies point to a consistent conclusion: retirement is fundamentally different from wealth accumulation. Effective retirement strategies consider not only investment returns, but also longevity risk, purchasing power, lifetime spending, and the role of guaranteed income.

The Annuitization Puzzle

If lifetime income is so valuable, why do so few retirees choose it?

For more than sixty years, economists have argued that lifetime income can improve retirement security, yet relatively few retirees voluntarily annuitize. Understanding why is one of retirement economics' most enduring questions.

The "annuitization puzzle" was first formalized by economist Menahem Yaari, who demonstrated that, under certain assumptions, converting retirement wealth into lifetime income could maximize retiree welfare by pooling longevity risk. Since then, Nobel Prize-winning economists and leading retirement researchers have continued to study why actual consumer behavior differs from economic theory.

Nobel Prize Winners Changed How We Think About Retirement

Building wealth and funding retirement are fundamentally different financial problems. Investments manage markets; lifetime income manages longevity.

From Franco Modigliani and Paul Samuelson to Harry Markowitz, William Sharpe, Robert Merton, and Peter Diamond, leading economists have recognized that retirement requires more than portfolio construction. Later in life, the objective shifts from maximizing wealth to creating sustainable income that can last an uncertain lifetime.

Behavioral Economics Explains Much of the Puzzle

The decision to annuitize is emotional as well as financial. Research shows that many retirees naturally value flexibility, liquidity, and control—even when guaranteed income may improve long-term outcomes.

Behavioral economists have identified recurring influences including loss aversion, the desire to maintain ownership of accumulated assets, underestimating longevity, present bias, and the tendency to focus on leaving principal to heirs. These are normal human preferences, not financial mistakes, but they often discourage lifetime income decisions.

The Industry Changed

Today's annuity market looks very different than it did twenty years ago. Most variable annuities are now designed for accumulation rather than annuitization.

Guaranteed Lifetime Withdrawal Benefits (GLWBs) became the industry's dominant retirement income feature by preserving account ownership while providing withdrawal guarantees. As a result, many contract owners never elect traditional annuitization, even though lifetime income remains available. The popularity of living benefit riders has fundamentally changed how retirees use variable annuities.

Advice Shapes Outcomes

Retirement income decisions are rarely made alone. Financial professionals often determine which strategies are discussed—and which are overlooked.

Most retail annuities are purchased through financial professionals rather than directly by consumers. Historically, relatively few advisory firms specialized in annuitized retirement income, and traditional assets-under-management relationships naturally emphasized managing investment portfolios rather than converting assets into lifetime income. As fee-based retirement income advice evolves, retirees have greater access to objective evaluations of both approaches.

Complexity Creates Inaction

Many retirees postpone lifetime income decisions simply because they appear overwhelming. Yet the underlying concepts are more understandable than they first seem.

Guarantees, payment options, taxes, fees, investment choices, and irrevocable elections can make annuitization appear intimidating. Research consistently shows that education, clearer information, and thoughtful guidance improve confidence and decision quality, allowing retirees to evaluate lifetime income alongside other retirement strategies.

Understanding Comes Before Deciding

Variable annuitization isn't the right solution for everyone. But it deserves the same thoughtful analysis as any other major retirement decision.

The purpose of this website is not to advocate for a single solution, but to explain how lifetime income works, why it has been studied for decades, and when it may—or may not—play an appropriate role in a comprehensive retirement income strategy. Understanding the economics, psychology, and practical trade-offs allows retirees to make more informed decisions with greater confidence.

I have one additional recommendation

I would add one final expandable section that is unique to Vanuitize:

Why We Built This Website

Understanding lifetime income shouldn't require reading academic journals or hundreds of pages of prospectuses.

Heading 6

1985 Nobel Prize Lecture in Economic Sciences

ModiglianiIt is a well-known fact that annuity contracts, other than in the form of group insurance through pension systems, are extremely rare. Why this should be so is a subject of considerable current interest. It is still ill-understood."annuitization puzzle"

1985Franco Modigliani

how about increasing the chances of a good retirement without increasing assets

"trading money when they don't need it for money as long as they do need it".

mertonThe direct attribution for this quote is an interview and article titled "Merton: Combine these 2 financial products to fund retirement," published by MIT Sloan Ideas Made to Matter on October 17, 2017

Based on the full text of the article "Annuitization Puzzles" by Shlomo Benartzi, Alessandro Previtero, and Richard H. Thaler, the behavioral obstacles preventing people from annuitizing their wealth can be broken down into three major psychological and institutional categories:

1. Cognitive Limitations and Misperceptions
Framing Effects (Investment vs. Consumption): This is one of the most powerful barriers. When an annuity is framed as an investment, consumers view it as highly risky because if they die early, they "lose" their principal. Conversely, if it is framed as a consumption tool (a guaranteed stream of lifetime spending), it becomes much more attractive.

Lack of Financial Literacy: Calculating lifetime income needs and understanding the mechanics of an annuity requires a high degree of financial sophistication. A general lack of understanding leads to confusion and avoidance.

Misjudging Longevity Risk: Many retirees underestimate how long they will actually live, leading them to believe that protecting against outliving their assets is unnecessary.

2. Behavioral Biases and Decision-Making Friction
Loss Aversion: Consumers focus heavily on the worst-case scenario—dying shortly after purchasing the annuity and losing the premium—while ignoring the risk of living a very long time without money.

Inertia and Procrastination: Deciding how to spend down retirement wealth is a complex, emotionally taxing decision. Because of this complexity, many retirees default to doing nothing at all, allowing their money to sit in liquid accounts.

Regret Aversion: Retirees fear making an irreversible financial choice that they might regret later if their health or financial circumstances suddenly change.

3. Preferences and Institutional Obstacles
The Desire for Liquidity (Precautionary Savings): Retirees value flexibility. They worry about unexpected, large expenses later in life—such as catastrophic healthcare costs or long-term care—and are hesitant to lock up their wealth in an illiquid product.

Bequest Motives: The desire to leave an inheritance to children or heirs deters individuals from converting their private wealth into a life annuity, which typically vanishes upon death.

The authors argue that understanding these specific behavioral bottlenecks is crucial because it allows institutions to design better default choices and choice architecture (like automatic annuitization frameworks) to help retirees manage their money safely.

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The second problem is more psychological. Rather than viewing an annuity asproviding
insurance
in the event that one lives past 85 or 90, most people seem toconsider buying an annuity as a
gamble,
in which one has to live a certain numberof years just to break even. But, as the example of Dave and Ron shows, it’s is thedecision to self-manage your retirement wealth that is the risky one.

merton quote "trading money when they don't need it for money as long as they do need it" what is attribution

The direct attribution for this quote is an interview and article titled "Merton: Combine these 2 financial products to fund retirement," published by MIT Sloan Ideas Made to Matter on October 17, 2017. [1]

Economists call this the “annuity puzzle.” Using standard assumptions,
economistshave shown
that buyers of annuities are assured more annual income for the restof their lives, compared with people who self-manage their portfolios. One reason isthat those who buy annuities and die early end up subsidizing those who die later.
David G. Klein
So, why don’t more people buy annuities with their 401(k) dollars?
Here’s one part of the answer: Some people think that buying an annuity is in someway a bad deal for their heirs. But that need not be true. First of all, a retiree candecide to set aside some portion of a retirement nest egg for bequests, eitherimmediately or at a later date. Second, if a retiree chooses to manage his or herown money, the heirs may face the following possibilities: Either they get
7/13/26, 4:36 PM The Annuity Puzzle for Retirement Investing - Economic View - The New York Times
https://www.

at what economists call "fair actuarial value.

thaler

"Rational choice theory predicts that households will find annuities attractive at the onset of retirement..."

$$\text{Benartzi, Previtero, and Thaler, "Annuitization Puzzles," 143.}$$

In his 1985 Nobel Prize acceptance speech, economist Franco Modigliani highlighted the "annuity puzzle". This concept refers to the contradiction between rational choice theory, which predicts that retirees should heavily utilize annuities to protect against outliving their income, and real-world behavior, where the voluntary purchase of such contracts remains extremely rare

1985, Franco Modigliani (1986)
drew attention to the “annuitization puzzle.” He said: “It is a well known fact rew attention to the “annuitization puzzle.” He said: “It is a well known fact
that annuity contracts, other than in the form of group insurance through hat annuity contracts, other than in the form of group insurance through
pension systems, are extremely rare. Why this should be so is a subject of consider- ension systems, are extremely rare. Why this should be so is a subject of considerable current interest. It is still ill-understood.” ble current interest. It is still ill-understood.” Modigliani’s remark remains true odigliani’s remark remains true
25 years later. Rational choice theory predicts that households will fi 5 years later. Rational choice theory predicts that households will fi nd annuities nd annuities
attractive at the onset of retirement because they address the risk of outliving one’s ttractive at the onset of retirement because they address the risk of outliving one’s
income, but in fact, relatively few of those facing retirement choose to annuitize a ncome, but in fact, relatively few of those facing retirement choose to annuitize a
substantial portion of their wealth

“Our approach to saving is all wrong: We need to think about monthly income, not net worth.” 1

1 Merton, Robert “Crisis In Retirement Income Planning” Harvard Business Review (Pub 2014) https://robertcmerton.com/wp-content/uploads/2017/08/The- Crisis-in-Retirement-Planning-HBR-2014-Merton.pdf

At Vanuitize, we are dedicated to empowering individuals in their financial futures through expert guidance in variable annuities. Our mission is to connect with investors aged 55 and older, offering tailored insights and strategies that highlight the benefits of variable annuitization. With a focus on education and personalized service, we strive to simplify complex financial concepts and help our clients make informed decisions that align with their retirement goals.

Imagine, annuitizing variably a variable annuity.

TIAA has made variable payments to academic, research, medical, cultural, and governmental fields since the 1950s to the general public since 2025

and the eight Cref separate accounts.82% euity

phancompliance-grade source (tom account

Annuitization is consistent with annuitants' top financial priorities for retirement: protecting a spouse's financial security, not outliving savings, and covering basic expenses with guaranteed income. tiaa

The annuity industry excels in its accumulation guarantees comonents but when it comes to the payout phase or annuitization phase its all fixed.

Fixed annuities that guarantee the same payment for life often have the option to ibcrease payments by a certain amount annually, tyoically from 1% to 5%. But the increases have no relationship to inflation and are acytuarily the exact same payments-an insurer will epect to take the same risk regrdless of the selection.

Variable annuities offer Guaranteed Lifetime Withdrawal Benefit (GLWB): Guarantees you can withdraw a set percentage (usually 4% to 6%) of your principal each year for the rest of your life, regardless of market performance, while still maintaining access to your remaining cash value.Percentage Payout Increases: The guaranteed withdrawal percentage typically increases as you reach certain age milestones (e.g., you might get $5\%$ at age 55, but $7\%$ at age 70).Roll-Ups:Caps and FloorPremium Bonus CreditsPoint-to-Point crediting: benefit base or income calculation base simp,le interest exponential interest ridwers guarstees Exclusion of Dividends: AAnnual Reset: Rollup Rate: A guaranteed fixed percentage rate (e.g., 6% or 7%) at which the Income Base grows during the deferral phase, independent of stock market performance.Simple Rollup: A rollup calculation where interest applies only to the original initial principal balance linearly every year (non-compounding growth).Compound Rollup: A rollup calculation where the percentage rate compounds annually on top of the newly accumulated Income Base balance.Rollup Duration / Cap Years: The exact contractual window of time that the rollup rate remains active, typically stopping after 10 to 15 years, or immediately upon activating lifetime withdrawals.Step-Up: Surrender Charge Period: A set number of years (often 5 to 10) starting from the date of deposit during which taking out excessive cash triggers a steep penalty fee.Free Withdrawal Provision: A standard allowance in most deferred contracts enabling you to withdraw up to a set amount (usually 10% of the account value annually) completely free of any surrender fees.Market Value Adjustment (MVA):

ncome Base (Benefit Base):Death Benefit Base: Rollup Rate: A contractually guaranteed percentage rate (e.g., 5% to 7%) by which the income base grows each year. It provides predictable growth to your future paycheck regardless of stock market downturns.Rollup Duration: The lifespan of the rollup guarantee. Most carriers cap it at 10 to 15 years, or until your first lifetime withdrawal, whichever occurs first.Step-Up (Ratchet): A feature that automatically resets the income base or death benefit to match the actual market cash value on the contract anniversary if the market value outgrew the rollup. This permanently locks in market highs.Enhancement (Annuity Credit): A one-time or periodic percentage bonus added directly to your premium or income base by the insurer, often to incentivize longer accumulation periods.M&E Charge (Mortality and Expense Risk): An annual percentage fee deducted daily from the subaccounts to cover the insurance company's underlying risk and death benefit guarantees.Administrative/Contract Fee: A flat yearly fee (often $30–$50) or percentage charge covering record-keeping and contract maintenance.Surrender Charge Schedule: A declining penalty fee timeline (e.g., 7% in year one, scaling down to 0% by year seven) applied if you withdraw cash beyond the contractually allowed limit.Free Withdrawal Amount: The maximum percentage of your cash value (typically 10% annually) that you can pull out during the accumulation phase without triggering a surrender charge.ROPDB (Return of Premium Death Benefit): The baseline upgrade. It guarantees your heirs will receive either the current market value or the total amount of money you invested (minus any withdrawals), whichever is higher. If you invest $200,000 and the market crashes to $120,000 when you die, your heirs still get $200,000.Highest Anniversary Value (HAV) / Ratchet Death Benefit: The insurance company looks at the contract value on every single contract anniversary (e.g., every year on the date you bought it). They lock in the highest value achieved. If the market drops later, your beneficiaries are paid that historical peak value.Earnings Enhancement Benefit (EEB) / Maxifier:

simple roll-up rate (5% to 7% annually is common in older designs, though current rates are often lower), while others use a ratchet mechanism th

Inflation

Longevity

Sequence risk

Purchasing power

Healthcare inflation

iving Benefit RidersThese are designed to protect your retirement income from market downturns, ensuring you can still draw a paycheck even if your actual investment accounts hit zero.GLWB

The Accumulation Phase: The time during which you pay money into the annuity. Your funds grow on a tax-deferred basis, meaning you do not pay taxes on your earnings until you begin withdrawing them.The Payout (or Annuitization) Phase: The period when the insurance company begins converting your accumulated accoun

It's the financial product where you write a check to an insurance company and the insurance company pays you until you no longer need it.

If you purchased variable payments on your life without a guarantee on how long these payments would continue to a beneficiary, it is possible that if you died before the initial payment date the insurance company would keep your premium in its entirety and you would have received no mortality credits.

But had you purchased variable payments on two lives with a twenty year guarantee and at the age of 100 arguing about your exposure to small cap stocks, you fared better with your returns and your credits.

by transforming capital to income, irrevocably lose liquidy.

Variable annuitization addressed the challenge of fixed payments: inflation

The biggest threat to retirement income may not be market losses, but inflation eroding purchasing power—shaped by Congress and the Fed.

Modern Portfolio Theory was built for managing portfolios, not income

Markowitz's "Game of Life" idea highlights a key limitation of his MPT: it was designed for mutual funds, to build wealth, not fund a lifetime of retirement income.

Maximize retirement income beyond the traditional 4% benchmark

With certain assumptions, TIAA annuity powerhouse shows a 67-year-old may begin with lifetime income of about 6.6% through variable annuitization.

Here are some thou5ghts or

Many smart people recommend itMany smart people recommend it: Nobel Prize winners helped build the academic case for lifetime income.

"Decades of Nobel Prize-winning research Many smart people recommend it: Nobel Prize winners helped build the academic case for lifetime income.

support the role of lifetime income in managing retirement and longevity risk."

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Inflation Changes Everything

The greatest threat to retirement income may not be market losses, but the gradual erosion of purchasing power. Fixed lifetime payments provide certainty—but not necessarily lasting buying power.

When inflation-adjusted annuities disappeared from the private market, retirees seeking to preserve purchasing power were left with few alternatives beyond accepting prudent capital market risk. Variable lifetime income combines the longevity protection of insurance with professionally managed separate investment accounts, allowing future payments to participate in market performance rather than remaining permanently fixed.

Retirement Income Requires a Different Framework

Modern Portfolio Theory revolutionized investing—but it wasn't designed to fund retirement income. Building wealth and spending it over an uncertain lifetime are fundamentally different challenges.

Harry Markowitz's groundbreaking work transformed portfolio management by balancing risk and return. Retirement, however, introduces a new objective: generating dependable income that may last for decades. Discover why many economists concluded that retirement income requires combining investment management with insurance and longevity pooling.

Looking Beyond the 4% Rule

Retirement income isn't limited to systematic withdrawals. Mortality credits make lifetime income possible in ways investments alone cannot.

Traditional withdrawal strategies estimate how long assets may last, but they cannot guarantee income for life. Variable annuitization pools longevity risk among annuitants, creating mortality credits that can increase sustainable lifetime income. Under certain assumptions, initial income may exceed conventional withdrawal benchmarks while continuing for as long as it is needed.

Rethinking Living Benefit Riders

Not every lifetime income guarantee works the same way. Different guarantees solve different retirement challenges—and at different costs.

Guaranteed Lifetime Withdrawal Benefits (GLWBs) allow continued access to account value while providing guaranteed withdrawals, but they often involve rider fees, benefit bases, and contractual limitations. Variable annuitization takes a different approach by converting retirement capital into lifetime income, eliminating the need for many of these additional guarantees while transferring longevity risk directly to the insurer.

Every Basis Point Matters

Small differences in cost can create meaningful differences in lifetime income. Every basis point matters over a retirement that may last thirty years or more.

Mortality and Expense (M&E) charges, investment expenses, advisory fees, and contract design all influence the income ultimately available to spend. Comparing these costs across insurers can reveal significant long-term differences and help preserve more of your retirement income.

Investment Costs Matter Too

The investments inside the annuity deserve as much attention as the insurance itself. Lower investment expenses can have a lasting impact on retirement income.

Many advisory annuities offer access to institutional-priced professionally managed separate investment accounts with substantially lower expenses than retail share classes. Over decades, reducing investment costs while maintaining disciplined portfolio management can meaningfully improve retirement outcomes.

Understanding Contract Design

Lifetime income is shaped by a series of important decisions. Understanding how they work together is often more important than any single feature.

Income guarantees, the Assumed Interest Rate (AIR), payment timing, separate investment accounts, fees, and other contract provisions all influence how lifetime income performs over time. Although each decision is straightforward, their interaction is what ultimately shapes retirement income, purchasing power, flexibility, and long-term financial security.

EliteDesigns® Variable Annuity 286

Sec Pac Pros

1 A variable annuity is an insurance contract and includes underlying investments whose value is tied to market performance. When markets are up, you can capture the gains, but you may also experience losses when markets are down.

5 Converting some or all of your savings to income benefits (referred to as “annuitization”) is a permanent decision. Once income benefit payments have begun, you are unable to change to another option.
variable annuities can play an important role in that plan, offering monthly income for the rest of your life with the opportunity to see your income grow—along with the choice to continue payments to others.1