New York Life Insurance Company, one of America's oldest and most respected life insurance companies, and currently the only one in the structured settlement industry with both an A++ from AM Best and an Aaa from Moodys, has created a wonderful resource website called "Guarantees Matter" which deals with life longevity issues in retirement and how that relates to income needs (the subject is also relevant with long term disability or sickness).
In prior blog posts and on the 4structures.com website I have discussed the concept of Monte Carlo analysis. Monte Carlo analysis or simulation permits us to move out of a linear realm and into one that encompasses many variables including the unknown of how long we're going to live.
New York Life reports that a "lack of knowledge combined with uncertainties surrounding investment returns and life spans mean that even retirees who have substantial nest eggs are gambling with their financial futures in retirement. Recognizing that risk, Americans planning their retirements are seeking professional advice on how to replace and supplement the guaranteed income streams traditionally provided through Social Security and corporate pensions. As consumers become more educated about appropriate withdrawal rates that don't create significant risk of outliving their assets, they will become increasingly interested in converting portions of their assets into guaranteed lifetime income streams"
A shocking statistic of New York Life's survey is that only 10% of Americans understand how much of their retirement savings they can safely spend each year without running the risk of outliving their assets.
Guaranteed life income streams include regular income annuities or immediate annuities and structured settlement annuities. Each provides a guaranteed safe income stream, and if lifetime is elected, it is an income that you can't outlive.
In light of New York Life's statistics, structured settlement payment recipients who feel tempted to sell their structured settlement payment rights should make sure they have a well thought out plan before they give up the guarantees that they already have.