Our friends are starting to retire, and we get to celebrate with them and hear all about their exciting plans. Yet often enough I hear about sleep-killing money anxiety, too, even from the best-prepared.
Only when it happened again recently did I realize there's no reason to be surprised.
Americans routinely report anxiety about money, particularly middle-aged people. Even though Gallup's most recent poll on finances was its most optimistic in a while, more than half of American adults reported themselves as either very or moderately worried about not having enough money for retirement.
It probably doesn't help with stress levels to have daily reminders online and in newspapers about all the reasons people should be anxious. A quick search on "outliving your money" turned up hundreds of hits, one of the most recent asking simply "are you prepared to live to be 100?"
For those of us who have had no choice but a do-it-yourself retirement program, there just isn't a sure path to a worry-free future. Even what looks simple isn't.
There's no better example than deciding whether it's smart to purchase a better night's sleep in retirement by buying an annuity.
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In their basic form, retirees "annuitize" their savings by turning over a chunk of them -- and the anxiety about how to best invest it -- to an insurance company in exchange for collecting a check for the rest of their lives. A sickening slide in the stock market all over the news? Shrug it off. Another check is due, and it will be the same amount as last month's.
Annuities also can help people with what's called the drawdown problem, which means how much to safely take out of savings every year to live on.
The recent rule of thumb is 4 percent of savings per year, but retirees who worry about outliving their money might spend even less. They eat store-brand canned soup and keep the thermostat at 60 degrees all winter for years, only to one day realize they will be leaving an estate they didn't get to enjoy. An annuity might have let them live a richer life.
But it turns out that buying an annuity isn't exactly a worry-free solution. Setting aside their expense, one problem with the traditional annuity is that you might die right away. The life insurance folks have responded to that worry by offering annuity contracts that would get the family some or all of the money back, maybe by continuing payments up through 20 years whether dad's still around or not.