One key to enjoying a comfortable retirement is feeling confident your money will last. That confidence, of course, is based on a knowledge of how and why your money will last. But when it comes to understanding annuities and the importance of protected lifetime income, consumers often run into a wall of confusing technical language.
Because annuities are part investment and part insurance, the industry has tended to explain its products using legal language derived from contractual obligations contained in annuities, according to Mike Harris, Educational Advisor to the Alliance for Lifetime Income.
“When we speak in language that people can understand, we not only make annuities more understandable, but we can also help improve decision making, leading to better outcomes for tens of millions of Americans,” says Harris.
For example, one long-used industry term encountered by consumers has been “surrender charge.” It doesn’t explain anything. Instead, calling it an “early withdrawal fee” actually tells consumers exactly what they can expect: If they make an early withdrawal, they’ll pay a fee.
Harris concludes, “Once we see things from the perspective of people planning their retirement income, we can get out of our own way.”