Hardy Plumbing
March 29, 2006

Dollars & Sense

"Plan For The Years Ahead: Immediate Annuities Could Last You A Lifetime"

Some retirees or people near retirement age may wonder if they will outlive their money, especially given the impact of market conditions on their retirement nest eggs during the past few years. Life offers few guarantees, but there is one you may want to consider.

Income For Life

An immediate annuity may help address the challenge of having enough retirement income to last a lifetime. An annuity is a contract between you and an insurance company that you generally buy with a lump sum and from which you begin receiving income within a short period, always less than 13 months. There are various ways to receive income payments that an annuity contract offers. Many annuities offer a variety of options you can choose from, including guarantees for life. A life annuity is designed to provide income for the rest of the life of the annuitant, no matter how long he or she lives. The amount of payment depends on the account value and the life expectancy of the annuitant.

An "annuitant," defined as the person whose life governs the duration of the payments, may purchase an immediate annuity at age 65 and live for only a year or two, while another may live to 100. Those who die early may forfeit their money to those who live longer.

Minimum Guarantees1

Some people don't like taking the risk that they may forfeit a sizable portion of their nest egg. There are annuity income options that guarantee payments for a specific time period, usually from 5 to 30 years. If the annuitant dies before all payments have been made, then the owner (or beneficiary, if the owner is deceased) will receive the balance of the payments for the rest of the guarantee period.

Another type of annuity income option guarantees payments for the annuitant's life, with a guaranteed number of years. If the annuitant dies during the guarantee period, payments will continue to the annuity's owner (or the beneficiary if the owner is deceased), for the remainder of the period. Many annuities also offer this option for the lives of two investors. For these annuities, after one annuitant dies, payments continue if the other annuitant is alive. Payments stop once both annuitants are no longer alive. These payments paid after the first annuitant's death may be the same, or lower, depending on what was selected at the time of purchase.

For More Information:

Let us help you determine if they make sense for your situation. If you'd like to learn more about Immediate Annuities, please call:

Michael Pellman, Financial Advisor-Retirement Planning Specialist, Morgan Stanley, Riverhead, NY, 631-284-5213

1. An annuity's guaranteed income feature is contingent on the claims-paying ability of the insurance company that issued the contract. An annuity's various charges and special features will reduce the value of your account, such as a fee for a guaranteed minimum income. Additionally, with a fixed immediate annuity, you are exposed to the impact of inflation on purchasing power.

The appropriateness of a particular investment or strategy depends on the investor's circumstances and objectives. Investments and services are offered through Morgan Stanley DW Inc., member SIPC.

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