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Single life annuity—or “One-Life Annuity,” as it is called in TIAA-CREF’s documentation—guarantees that you will have income for the rest of your life. Given the size of the monthly payment, it benefits those who have not had an opportunity to accumulate large retirement accounts and run the risk of outliving their assets. The one-life alternative seems obviously appropriate for single people who either do not wish or are not in a position to pass retirement assets on to heirs or charity. They also do not have another person for whom they want to provide an income after their death. (more…)

The loss of a member of family might be devastating for family members, both equally psychologically as well as on a financial basis. Social Security is intended to be a survivor program in addition to a retirement program. We are going to discuss one-time lump sum social security death benefit, monthly social security survivor benefits, whom qualifies for survivor benefits, and how you can apply for benefits whenever a family member passes away. (more…)

In developing a retirement plan there are several factors to consider in addition to the amount you need or want to save.

1. Income Taxes.

The above discussion did not take into consideration income taxes. You might have to save more if you have to pay income taxes on all or part of your retirement benefit or your contributions. Distributions from qualified employer plans are always subject to retirement income tax. (more…)

Sense of financial security in retirement will elude anyone who worries about what will happen to them when someone else dies. Whether the risk is loss of investment expertise, the absolute loss of income (e.g., because a pension benefit has no survivor benefit), the loss of assets to probate and estate taxes, or other circumstance of financial loss, providing for survivors is an element of financial security in retirement. (more…)

Cash flow planning is the process by which the flow of income necessary to sustain a given standard of living in retirement is identified and financed. It is perhaps the most critical part of retirement planning. Cash flow planning for retirees depends crucially on two factors: (1) the resource constraints a retiree faces in terms of assets and other retirement income sources and (2) the desires and needs a retiree has for spending in retirement. Both of these, in turn, depend to a great degree on when the planning is done. (more…)

We have alluded to the Transfer Payout Annuity from time to time, and now it gets the attention it clearly deserves. The Transfer Payout Annuity is literally an annuity, and it represents the mechanism by which funds are transferred from a TIAA accumulation to either one of the other investment choices in the TIAA-CREF family or as a taxable distribution after age 59 1/2 to the participant. (more…)

Because gay, lesbian, bisexual, and transgender people can still be legally discriminated against in employment in most of the country, and because gay couples are not treated equally under Social Security, pension income is an important policy issue affecting gay elders. Contrary to a widely held stereotype of gay affluence, gay men and lesbians earn no more than heterosexual men and women. In fact, gay men earn about 15% to 20% less than heterosexual men. Lesbians earn the same as heterosexual women, but because women on average earn less than men, lesbian couple households earn significantly less than heterosexual couple households (Klawitter and Flatt 1998). (more…)

Once the cash flows to be financed are determined, whether via a detailed version of the determination of planned expenditures or the simpler “rule of thumb approach,” the question of how each $1 of assets will be turned into an income flow must be addressed. How much income will each dollar generate, and for how long? This is the basic issue of longevity risk (the risk that a person will live either beyond, or not until, their “life expectancy”). This source of uncertainty presents perhaps the most significant challenge for cash flow planning in retirement. (more…)

Still other decisions must be made about pension plans. The retirement age must be decided, and consideration must be given to provisions for advantages of early retirement and the resulting adjustment of benefits. Employees by law may work beyond age 65 until they have 10 years of participation in the plan.

When a retirement plan provides that a participant may take his benefits in the form of an annuity, (more…)