MetLife, Pru offer new strategies for retirement.Two insurance industry giants have developed retirement-income schemes that urge individuals to do something that goes against human nature: defer gratification GRATIFICATION. A reward given voluntarily for some service or benefit rendered, without being requested so to do, either expressly or by implication. . Prudential Financial was first out of the box with its Income Bridge Approach to maximizing Social Security income, for which it is seeking a patent. Individuals may initiate Social Security payments as early as age 62, but the payments become much larger if they hold off three or four years to their fill retirement age or to age 70, when the initial payment can be more than double that commencing at age 62. Prudential sees even more value in the strategy because Social Security income is tax-free for most people, provides annual inflation protection, lasts for life, and continues payments to a spouse when the individual dies. To make up for the initial absence of Social Security income, Prudential has clients roll over some assets in defined-contribution or Individual Retirement Accounts into a period-certain immediate annuity immediate annuity An annuity that is purchased with a lump sum and that begins making payments one period after the purchase. Immediate annuities are most commonly purchased by people who have accumulated a sum of money and are ready for retirement. that increases payouts by 3% annually. Prudential uses proprietary software to illustrate scenarios for increasing Social Security benefits. The software incorporates personal information to optimize the strategy for each client. Normally, individuals initiate Social Security early and then supplement income with IRA Ira, in the Bible Ira (ī`rə), in the Bible. 1 Chief officer of David. 2, 3 Two of David's guard. IRA, abbreviation IRA. withdrawals, but Prudential said its new approach should result in lower annual expenses, lower taxes and better protection against running out of income. The company introduced the program to retirees in its defined-contribution plans Defined-Contribution Plan A retirement plan wherein a certain amount or percentage of money is set aside each year for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties. . In September, MetLife Retirement & Savings launched MetLife Retirement Income Insurance, a fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. that defers payouts until later in life, such as an 85th birthday, when an individual's other income sources may 2be running low. Offered as a voluntary benefit in the workplace and funded with after-tax contributions, the annuity generates a stream of income beginning sometime in the future as decided by the employee--perhaps 15, 20 or 30 years. It can be funded with a single lump sum Lump sum A large one-time payment of money. or with flexible premiums, and it is portable. A companion product is available for pretax rollover A graphic element in an application or on a Web page that changes its color or shape when the pointer is moved (rolled) over it. See JavaScript rollover. See also n-key rollover. funds. The income insurance plan is the latest of several personal retirement plans that MetLife offers. |
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