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Who can benefit from creating a single-life annuity?

On Behalf of | Apr 21, 2022 | Estate Planning |

As a single person who has worked your entire life, you have accumulated significant wealth. If you have no family or heirs to leave your assets to, you may wonder what you can do with your wealth. Connecticut residents can create a single-life annuity that can keep them in the lifestyle they are used to for the remainder of their retirement years.

What is a single-life annuity?

A single-life annuity is a valuable estate planning tool used for ensuring that you won’t run out of retirement funds for as long as you live. It is similar to other annuities that you can set up with an insurance or annuity company. However, it has one significant difference: The payouts only go to one person, the owner of the annuity. When you pass away, the payments cease and cannot be given to another person. You will receive higher monthly payments by the very fact that they will stop with your death.

These financial instruments have one major drawback: You could die before you get a chance to use the money. For most single individuals, though, the risk is worthwhile because of the larger retirement payout.

Should you consider a single-life annuity?

The goal of estate planning is to protect your substantial assets. If you are in your 20s or 30s and have already accumulated substantial wealth, you may be better off putting your money in other retirement financing tools and stocks. Single-life annuities are best for individuals aged 55 to 75 whose income won’t be affected by market fluctuations. Creating an annuity when you are in your late 70s or 80s is not cost-effective as they are relatively expensive to create.

Although single-life annuities are generally not the best option for wealthy married couples, they can work in some cases. If you have at least one other source of retirement funds, a single-life annuity can substantially boost your retirement income if you structure all of your assets through various financial instruments. After all, a fundamental goal of estate planning is to keep you comfortable in retirement.