Could the Forever Fund Help You Meet Your Retirement Goals? Five Scenarios

There’s been a lot of buzz around annuities recently. With more than 10,000 people turning 65 every day (per HHS estimates), people are searching for new money strategies that will help them reach their retirement goals, and annuities like the Forever Fund have emerged as a popular solution. While the Forever Fund may not be a good fit for everyone, if you find yourself in one of the following five scenarios, you may want to consider buying one.

First, What Is the Forever Fund?

The Forever Fund is a single premium immediate annuity (SPIA) that is customizable. Let’s break that down:

• An annuity is a contract between the annuity owner and the annuity company. The annuity owner pays a premium in the first phase of the contract, and in exchange, the annuity company pays out a series of payments in the second phase of the contract. Annuities can enjoy tax-deferred growth and are frequently used for retirement income, but there are different types of annuities with different rules.
• A single premium annuity is paid with a lump sum premium payment instead of a series of premium payments. This is ideal for people who want to buy an annuity with one payment, for example, by using money from a retirement savings account.
• An immediate annuity begins paying the annuity owner soon after purchase. In some other annuities, the funds are allowed to grow for a while before payments begin. An immediate annuity is perfect for people who are already retired and need retirement income right away.
• A customizable annuity has features that you can adapt to your needs. With the Forever Fund, you choose the payment period you want. If you only need income for a set period of time, you could choose a fixed period of 5, 10, 15 or 20 years. If you want lifetime income, you can choose a guaranteed lifetime period. You can also customize your annuity with options that give you inflation increases or that ensure your loved ones will receive payments if you pass away early.

If these features don’t seem right for you, you may prefer a different type of annuity. However, if any of the following five scenarios apply to you, the Forever Fund could be a good fit.

Scenario #1: You’re Worried About Running out of Money

Jenny is 65 years old and lives in Oregon. She spent her working years saving for her future retirement. Then the day finally arrived, and she started to worry. Did she have enough saved? What if she lived longer than she expected? What if she ran out of money?

By taking $250,000 of her retirement savings and putting it in a Forever Fund annuity, Jenny can obtain a guaranteed lifetime payment of $1,593.96 a month*. Combined with her Social Security benefits and other retirement funds, she is confident she will have enough money for retirement, without worrying about running out of money.

Scenario #2: You’re Worried About Market Volatility

Sam is 70 and has all his retirement money in a 401(k). When he was younger, he could ride the ups and downs of the stock market, but now he’s worried he won’t be able to recover if the market crashes. He’s looking for a source of retirement income that provides a guaranteed payment.

He rolls over $400,000 from his 401(k) into a Forever Fund annuity with a lifetime payout. Now he’s guaranteed a monthly payment of $2,889.17*.

Scenario #3: Inflation Is Stressing You Out

Victoria is 65 and has already had to adjust her retirement budget to reflect recent inflation rates. It was very stressful for her when she realized her budget no longer stretched far enough, and now she wants to make sure she’s ready for the future impact of inflation.

The annual inflation rate can vary, but Investopedia says the Federal Reserve tries to keep it at 2%. Victoria wants a retirement strategy that assumes a slightly higher average rate of inflation at 3%.

She rolls over $300,000 into a Forever Fund annuity with a lifetime payout that increases to account for inflation. Initially, she’ll receive a monthly payment of $1,358.91*, but this will increase by 3% every year.

Scenario #4: You Want to Take Care of Yourself and Your Loved Ones

Peter is 75 years old, and he’s trying to balance his retirement needs with his desire to leave a legacy and provide for his children and grandchildren. He thinks about buying a life insurance policy, but he can’t qualify for affordable rates due to his health issues, and he doesn’t want to tie up all his money in life insurance premiums because he’ll need some of it. He’s also interested in an annuity, but he needs to make sure it will continue to pay funds to his heirs instead of ending with his death.

He decides to buy a Forever Fund annuity with a fixed payout period of 20 years. He’ll receive a quarterly payment of $6,312.51*, and if he dies before the 20-year-term is over, his beneficiaries will receive the rest of the payments. This way, he knows he’s taken care of, and he expects to leave some funds for his loved ones as well.

Scenario #5: You’re Retiring Early and Need to Bridge the Income Gap

Linda is retiring at age 55. She has a good amount of money saved in her 401(k), and she’ll be entitled to Social Security retirement benefits – but she can’t access those funds yet. She

doesn’t want to pay early withdrawal fees, and she’s hoping to wait until she turns 70 to claim Social Security so she can maximize her benefit amount.

She also wants to downsize her home, so she sells her house and receives a profit of $700,000 after taxes. She thinks this will be enough to bridge the retirement income gap, but she wants to make sure she doesn’t run out early, so she buys a Forever Fund annuity with a 15-year payment period. She receives a monthly payment of $5,799.58*.

Is a Forever Fund Right for You?

*The figures used in this article are examples based on conditions at the time of writing and additional assumptions. To see how much you could receive from an annuity, use the Forever Fund estimator.

Are you interested in learning more about the Forever Fund? The Canvas team is ready to answer your questions. Contact us.