Guaranteed Income Definition
Guaranteed income generally refers to any type of income that is contractually guaranteed. The phrase guaranteed income is most often used in discussion of guaranteed income retirement accounts or plans.
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Basics
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Guaranteed income retirement accounts are intended to protect future retirees from down financial markets. Unlike accounts that offer only investment-driven retirement, guaranteed income accounts commit to a certain lifetime income amount for the account holder, even in down markets.
Benefits
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Guaranteed income retirement annuities are popular with workers concerned about having enough in retirement to live. Down economies cause more workers to consider retirement plans that are disciplined in payout and that guarantee sustainable living after retirement. Income payments are stable and many plans offer additional growth options to increase retirement funds.
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Drawbacks
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Aggressive investors who want to live more lavishly early in retirement might prefer to take their chances on a healthy investment market. Straight income annuities limit your growth potential and force you to spread your retirement out in fairly equal increments for life.
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References
- Photo Credit retirement at last image by Pix by Marti from Fotolia.com
