Live Long and Prosper

New annuity products help ensure your life
is as comfortable as it is long

April 3, 2008

Plenty of people buy life insurance to offset the financial consequences of a life ended too soon. Paying off the mortgage, getting the kids through school, funding the everyday needs of those who depend on you—life insurance plans can cover them all.

But what about the consequences of a life lived long? Are you prepared financially for the prospect of surviving and thriving well into your 80s, 90s or beyond?

You’d better be—especially if you’re part of the silver tsunami.

An aging population

The rise in the number of older Americans has been noted for awhile, showing that people are living longer. The Census Bureau reported that 90- to 94-year-olds grew by more than 44 percent from 1990-2000. What’s more, the demographic groups for those ages 45–54 (the Boomers) grew by even greater percentages during the same decade.

The Boomers are expected to stay healthier and live longer than any previous generation. But they face some emerging financial uncertainties. The solvency of Social Security remains a topic of debate and health care cost inflation shows little sign of abating. How will they finance retirement when their wallet is being pinched from both sides?

Annuities can help

One financial product that can help stabilize individual income during retirement is an annuity.

“Although annuities have been around for decades, they’re still misunderstood by a lot of people,” said Bill Williams, a manager at Erie Family Life Insurance. “In part, that’s because the financial impact of living long beyond retirement age is not something that people often consider.”

An annuity, generally speaking, is an agreement between an organization and an individual—the organization agrees to pay the individual a stream or series of payments.
Life insurance companies sell annuity products because their mission is to protect individuals’ financial freedoms in case of unexpected occurrences, including living longer than expected.

“The benefit of purchasing an annuity is that it can guarantee an income that cannot be outlived,” Williams added. “By investing some or all of your 401(k) or other savings in an annuity before or when you retire, you can secure a steady monthly income for you or a beneficiary for as long as either of you live—whether that’s to 75, 95 or longer.”

To broaden the options for Boomers and others planning for retirement, Erie Family Life recently added several products to its annuity series. One new product, the CD-type annuity, gives buyers the option of locking in an initial interest rate for three, five or seven years. To learn more about this annuity product and others, contact your ERIE agent who can help you decide which type of annuity best serves your needs.