Annuity? Never

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If you work with boomer-generation women, are you properly responding to their need for lifetime income? Consider this parable.

Not five minutes into the meeting with Sheryl, Bert, a financial planner, appeared to fully understand her twin priorities: protect Sheryl's nest egg and provide monthly income that will last for the duration of her retirement. Those were unambiguous objectives from Sheryl’s perspective.

"I recommend an annuity," Bert said.

'How does it work?" Sheryl replied.

"Well, you purchase an annuity with a lump sum of money. In turn, it provides you a monthly paycheck, The payments can commence as soon as 30 days, or they may be deferred until a later date. If there is a deferral, the amount of the payments you receive will be higher."

"Are the payments guaranteed?” asked Sheryl.

Bert replied, "Guaranteed? No, not guaranteed. But there is a high probability that you will receive the payments for your entire lifetime."

"High probability? What does that mean?"

"Well, said Bert, "My computer printout indicates that you would have a 95% probability of receiving these payments for as many as 30 years. That would take you several years past your life expectancy. So, there's a margin there."