Retirees know that a large portion of their after-retirement income will go to pay for their healthcare costs not covered by Medicare or other retiree insurance. According to a 2002 Consumer Expenditure Survey, retirees spend 13% of their income on healthcare. However, the percentage of retiree income spent on healthcare starts out relatively small at 6.8% at ages 55 – 64 and increases to 15.1% at ages 75 and older. Will you be able to handle this increased burden? A deferred fixed annuity can help bridge the gap between your income and your healthcare expenditures by offering favorable interest returns and tax deferred savings during the accumulation stage, and different options for disbursement that fit your needs during the payout stage.

The best time to start thinking about your healthcare costs as a retiree is way before you retire. But if you are just about to retire or have just retired and you haven’t considered how you’ll pay for increasing healthcare costs, there is hope. Consider moving a portion of your savings into a multi-year guaranteed deferred fixed annuity.

Harold, who is 58 years old and thinking about retirement, moves $200,000 of his retirement savings into a 10 year fixed annuity. The interest rate on the annuity is 5%. When he retires at age 68, his fixed annuity will have grown in value to $325,779 during the accumulation phase. And he’ll have been charged no taxes on the gains, allowing money usually paid to the IRS to compound. At this point he’ll enter the payout stage of the annuity and be faced with a variety of options.

During the payout stage, Harold can convert his fixed annuity into an immediate annuity. With an immediate annuity, Harold can receive approximately $2500 in monthly payments for life to help with expenses, healthcare or otherwise. If he feels that he won’t need the annuity funds for healthcare expenses anytime soon, Harold can also roll over his multi-year fixed annuity into another fixed annuity, without any tax implications, thanks to the IRS’s 1035 exchange provision. Other options include taking a lump sum payment, or spreading out his payments over a series of months or years.

If you are interested in learning more about using a deferred fixed annuity to save up for future healthcare expenses, call the Specialists with AnnuityForLife.com at 1-888-261-6237.