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Incorporating these investment vehicles into your retirement income strategy can provide superior outcomes compared to traditional income options for several reasons:
📌 Access to long-term bond yields without interest rate risk: Guaranteed lifetime income provides access to long-term bond yields without exposing you to interest rate risk. Insurance companies absorb this risk, leading to higher risk-adjusted yields.
📌 Risk-pooling and mortality credits: Annuities offer higher yields than long-term bonds due to risk-pooling and “mortality credits”. Mortality credits benefit individuals who live longer, as they share in the income that would have gone to those who die early.
📌 Tax-efficient income distributions: The payouts from guaranteed lifetime income annuities have favorable tax treatment compared to bond-coupon payments. This tax efficiency results in higher after-tax yields, contributing to better retirement outcomes.
Now is the time for you to lock in the highest rates possible on your life savings, much like you might have wished you did with your mortgage when interest rates were at all-time lows.