The Difference: Living Well Versus Living in a State of Perpetual Worry

Retiree satisfaction rates increase when income is annuitized. Click to expand.

Guaranteed income in the form of an annuity is as old as the Roman Empire, where “annuas” were issued to make sure people didn’t run out of money. Later (MUCH later), a 2005 article in the Wall Street Journal jump-started a growing body of evidence that CERTAINTY is good for you. The secret to a happy retirement, wrote staff reporter Jonathan Clements, are “friends, neighbors and a fixed annuity.”

Clements cited research by Keith Bender, an economics professor at the University of Wisconsin-Milwaukee, saying that retirees “who receive traditional company pensions are happier than those who have to rely solely on the savings they have amassed in 401(k) and similar retirement-savings plans. Seniors, it seems, like the sense of security that comes with guaranteed, predictable income.”

If you don’t have a pension (which went the way of the buffalo long ago in America), buy yourself income, said Clements, “by stashing part of your nest egg in an immediate-fixed annuity that pays lifetime income.”

The connection at this juncture to those considering what to do with money from an injury settlement should be clear, but if not, stay tuned. People with a higher percentage of annuitized income are happier on nearly every measure, according to these studies:

• “We find that most retirees who can finance more of their consumption in retirement from premium annuities (vs. Social Security benefits and accumulated savings) are more satisfied.” – Rand Corporation, Annuities and Retirement Satisfaction, 2003
   
• “We were able to demonstrate that annuities boost satisfaction at all stages of retirement.” – Towers Watson, Annuities and Retirement Happiness, 2012
   
• “Securing at least a base level of lifetime income should be every retiree’s priority — at least if they want to live happily ever after.” – Time, Lifetime Income Stream Key to Retirement Happiness, British study, 2012
   
• “Nearly seven in 10 retirees who own an annuity are more confident their savings and investments will not run out if they live to age 90, compared with 57% of retirees who don’t own an annuity.” – LIMRA, Retirees Who Own an Annuity Are More Confident, 2018
   
• “A stable income is often the difference between living well and living in a state of perpetual worry.” – American College of Financial Services, How Annuities Can Increase Happiness In Retirement, 2019.

Now meet Teresa Ghilarducci, an evangelist for new ways of achieving retirement security. A professor of economics for 25 years at the University of Notre Dame, Ghilarducci joined the New School for Social Research in 2008 to focus all her considerable energies on heading off the growing retirement crisis in the U.S. Her research has found that financial insecurity causes higher levels of anxiety, which fuels a vicious cycle of stress, cognitive decline, and worsening health. Meanwhile, those who choose to annuitize some part of their retirement savings are happier and far less concerned about the future.  

“Senior happiness and security also stem from how one’s retirement income is delivered,” she emphasized, “meaning whether one has a pension versus a lump sum of savings can determine their well-being.”

Structured Settlements Provide the Ultimate Financial Security

Nothing could be more important than knowing a check will be in the bank every month for those facing an upended life of emotional and financial chaos after a serious injury. No worries about a roller-coaster stock market; no worries about how to best manage investments; no worries about “helpful advice” from well-meaning friends and family. Those who opt for investing some of their settlement funds into a structured annuity also enjoy tax advantages that are not available to the public.

And that, dear readers, adds up to PEACE OF MIND!