Deferred Income Annuity for Retirement Security

Author: New York Life
Published: 2011/07/12 - Updated: 2026/01/23
Publication Type: Announcement
Category Topic: Life Insurance - Related Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This product announcement details a deferred income annuity solution designed to address the retirement income gap created by declining employer pension plans. The information is authoritative as it comes directly from New York Life Insurance Company, a Fortune 100 mutual insurer with 166 years of operational history and the highest financial strength ratings from all four major credit agencies. The annuity allows individuals to invest a minimum of $10,000 and set a future income start date, at which point they receive guaranteed lifetime payments. This financial tool proves particularly useful for people with disabilities, seniors, and those without traditional pensions who need to create predictable income streams they cannot outlive, offering three distinct strategies: building pension-like income during working years, efficiently converting assets near retirement, or establishing longevity insurance for advanced age - Disabled World (DW).

Definition: Future Income Annuity: A Future Income Annuity is a type of deferred annuity contract where you make either a lump-sum payment or series of payments to an insurance company now, in exchange for guaranteed income payments that begin at a specific future date you choose - often at retirement. The money you invest grows tax-deferred during the accumulation phase, and once payments start, you receive a predictable stream of income for a set period or for life, depending on the contract terms. These annuities are designed to address longevity risk by ensuring you won't outlive your money, though you're essentially trading access to a large sum of capital for that guaranteed income security. The payment amount you'll eventually receive depends on factors like how much you contribute, how long the deferral period is, your age when payments begin, and current interest rates at the time of purchase.

Introduction

New York Life Insurance Company has announced the launch of its Guaranteed Future Income Annuity(1), a deferred income annuity which offers consumers an opportunity to create their own 'pension-like' retirement income at a time when employer-sponsored defined benefit plans are dwindling. The flexible premium product gives Americans a way to allocate a portion of their retirement savings to a future guaranteed income stream that they can't outlive.

Main Content

The product allows a policyholder to make an initial premium payment of at least $10,000 and set an income start date in the future, at which time they will begin receiving guaranteed income payments for the rest of their life. Between the initial premium date and the income start date, the policyholder can continue to make premium payments in smaller increments, and can defer or accelerate their income start date as personal needs change.(2)

The product meets several needs:

1. For working Americans, it can it can help build a 'pension-like' guaranteed income payout for the future. For example, a 54-year-old man without a pension can invest $10,000 per year for ten years. Starting at age 65, he will receive $9,500 per year for life.(3) This income strategy, although not a replacement for a pension, can generate an income amount that is comparable to the 2005 average private sector pension which pays about $7,700 per year.(4)
2. For people nearing retirement, it can efficiently convert assets into future income. For example, a 57-year-old male, who is approaching retirement might typically move a portion of his portfolio into a five- year CD as a fixed income investment to prepare for the transition from accumulating savings to generating retirement income. In today's environment, a five-year CD may yield around 1.68%.(5) Alternatively, by investing in the Guaranteed Future Income Annuity, a 57-year-old man could guarantee an 11.3% lifetime annual payout rate at age 66.(6)
3. For a retiree, it can increase spending power in early retirement by providing the certainty of a guaranteed income that will start at a pre-determined advanced age, protecting his or her retirement needs beyond average life expectancy. For example, a 65-year-old man who invests $100,000 (non-qualified) will receive a guaranteed $65,500 per year payment starting at age 85.(7) With this 'longevity insurance' in place, the policyholder can enjoy and spend down his savings knowing that a secure income stream will begin at age 85.

"With the continued decline of traditional pension plans and concerns about Social Security, many Americans are facing a retirement income gap. Like a pension, the Guaranteed Future Income Annuity ensures that retirement income will be guaranteed for life - not just a bet on future returns that may or may not work out," said Chris Blunt , executive vice president in charge of Retirement Income Security, New York Life Insurance Company.

"New York Life, as a mutual company, is owned by our policyholders and built around a 166-year commitment to making good on long-term promises and being there for our clients. We believe this product is a sound solution for those seeking the attributes of guaranteed income similar to the pensions that their parents once relied on. And our guarantee is backed by the highest possible ratings from all four of the major credit rating agencies."

Flexibility To Meet Individual Needs

The product offers the following features and benefits that allow policyholders to customize their policy to meet their individual needs:

The ability to make subsequent premium payments during the deferral period, which is the time between the initial investment and two years prior to the income start date.

The income start date can be adjusted for any reason - accelerated or deferred one time.(8)

Policyholders can customize their payment stream to include another annuitant(9), inflation protection, and legacy options including a cash refund feature that provides beneficiaries with the difference between the premium payment(s) and any income received.

"Many boomers have spent a lifetime taking care of their families, and now it's their turn to focus on their future by taking control of their retirement. They're accumulating assets, but they don't need assets in retirement - they need income. We believe the Guaranteed Future Income Annuity can meet a fundamental need by helping boomers accumulate a guaranteed lifetime income that they can't outlive," said Matt Grove , vice president in charge of New York Life's Guaranteed Lifetime Income business. "We're excited to help people take the guesswork out of retirement income."

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States(10) and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings from all four of the major credit rating agencies. Headquartered in New York City, New York Life's family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments(11) provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

References

1 - Issued by New York Life Insurance and Annuity Corporation (NYLIAC) a wholly-owned subsidiary of New York Life. Available in jurisdictions where approved. Guarantees are subject to contract terms, exclusions and limitations, and the claims-paying ability of NYLIAC. This contract has no cash surrender value and no withdrawals are permitted prior to the income start date. Income payments are guaranteed at least as long as the annuitant is living, provided the annuitant is alive on the designated income start date. Contracts in which a Life Only payout option is selected do not provide a death benefit either prior to or after the designated income start date.
2 - The ability to move the income start date is not available for the Life Only option and it can only be moved back a maximum of five years from the original income start date.
3 - The GFIA rates are based on preliminary pricing as of July 2011 for Life Only option. Payout amounts are for illustration purposes only and will vary depending on each specific situation. Rates are subject to change.
4 - Congressional Research Service, 2005.
5 - National average APY five-year CD rate as per Bankrate.com, June 2011. CD does not require distribution of principal and as such, principal becomes available again, whereas each GFIA payout includes interest and return of principal.
6 - The GFIA rates are based on preliminary pricing as of July 2011, for Life Only option. Payout amounts are for illustration purposes only and will vary depending on each specific situation. Rates are subject to change.
7 - The GFIA rates are based on preliminary pricing as of July 2011, for Life Only option. Payout amounts are for illustration purposes only and will vary depending on each specific situation. Rates are subject to change.
8 - Restrictions may apply.
9 - Not all payment options are available for all ages and circumstances, in jurisdictions where approved.
10 - Based on revenue as reported by "Fortune 500, Ranked within Industries, Insurance: Life, Health (Mutual)," Fortune magazine, May 5, 2011.
11 - New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.

Insights, Analysis, and Developments

Editorial Note: While traditional pensions have become increasingly rare, the rise of deferred income annuities represents a significant shift in how Americans approach retirement planning. This product addresses a fundamental challenge facing millions who must now self-fund their retirement years without the safety net previous generations enjoyed. For individuals managing disabilities or chronic health conditions, the certainty of guaranteed lifetime income removes one major source of financial anxiety from an already complex situation. The flexibility to adjust income start dates and customize payment structures acknowledges that retirement planning isn't one-size-fits-all - different people face different circumstances, health trajectories, and financial needs. As longevity increases and traditional support systems evolve, tools that provide predictable income streams become not just financial products, but essential components of dignity and independence in later life - Disabled World (DW).

Attribution/Source(s): This quality-reviewed publication was selected for publishing by the editors of Disabled World (DW) due to its relevance to the disability community. Originally authored by New York Life and published on 2011/07/12, this content may have been edited for style, clarity, or brevity.