A major concern we hear from clients entering retirement is, “What happens if I live longer than my savings?” Right behind it is the fear of needing long-term care and not wanting to become a financial burden on loved ones. These are real and reasonable worries — and proper planning can help ease them.
In today’s Cardinal Lesson, we discuss a retirement income strategy designed to address both concerns at once. It involves a lifetime income annuity that also includes an enhanced long-term care benefit. While this is not long-term care insurance, it does provide guaranteed income for life and the ability to temporarily double that income if you ever need help with daily activities like bathing or dressing due to a health event.
How It Works
You place a lump sum — for example, $200,000 — into the policy. You can buy it with IRA funds or non-IRA money. The money then grows at the insurance company until you decide to start taking income. The longer you wait to start, the larger your guaranteed monthly check will be.
Once you turn on the income, it continues for as long as you live — or for as long as either spouse lives if you’re a couple. And if one of you ever needs long-term care support, the income can double for up to five years. That extra money can help pay for care at home or in a facility, easing strain on your family and your savings.
A Real-World Example
In our video, we walk through a case of a couple who both turned 65. They put in $200,000 and waited ten years before taking income. When they start their payments, they receive just under $32,000 per year — and if one of them needs long-term care, that amount can double to about $64,000 for up to five years. Even if the account value is eventually used up, the income keeps coming for life.
Why People Consider This Strategy
This approach appeals to retirees who want steady income they can count on regardless of market swings. It’s also attractive to those who worry about the high cost of long-term care but may not qualify for or want to purchase traditional long-term care insurance. The policy has fees and limitations, and it should never be used for all your assets. However, it can serve as a reliable income foundation within a broader retirement plan — alongside Social Security, personal savings, and other investments.
Is It Right for You?
Whether this fits your retirement needs depends on your age, health, tax situation, and long-term goals. Many people appreciate having a guaranteed income stream that lasts as long as they do, plus the peace of mind of knowing there is some extra support available if long-term care becomes necessary.
If you’d like to see an illustration based on your age and state, or you simply want to explore whether this strategy belongs in your retirement plan, we’d be happy to help. Reach out through CardinalGuide.com or call our office, and we’ll walk through it together.
Planning ahead means you don’t have to spend retirement worrying about “what if.” With the right tools in place, you can enjoy life confidently, knowing you’ve prepared for both the expected and the unexpected.
