Taking Charge of Lifetime Income: ‘It’s That Uncertainty We’re Trying To Control’
- Written By Terry Turner
Senior Financial Writer and Financial Wellness Facilitator
Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Foundation for Financial Wellness and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).Read More
- Edited ByLamia Chowdhury
Lamia Chowdhury is a financial editor at Annuity.org. Lamia carries an extensive skillset in the content marketing field, and her work as a copywriter spans industries as diverse as finance, health care, travel and restaurants.Read More
- Updated: March 24, 2023
- This page features 3 Cited Research Articles
- Edited By
Life and circumstances made life-long financial security a top priority for Andrew Griffith, a Certified Public Accountant in Sloatsburg, New York and an accounting professor at Iona University.
Griffith has an MBA from the University of Central Oklahoma and DBA — Doctor of Business Administration — from Nova Southeastern University. In addition to his CPA, Griffith’s business certifications include EA, CMA®, CIA, CFE, and CRMA.
But one of the biggest financial lessons he learned came from his own experiences growing up and later trying to secure a lifetime retirement income through a pension — but falling short three times.
“Looking back and talking to other people who walked away from locking in a pension — every one of them that I saw were financially unstable, particularly when they needed the money most because they were no longer able to work,” Griffith said.
Griffith’s journey took him from limited opportunities as a teen to service in the Navy to finally setting his own course — using his financial education to create his own guaranteed lifetime income through annuities. Annuities, he says, now play a featured role in his retirement plans.
CPA and accounting professor at Iona University
Growing Up With Limited Opportunities
“I came from a very poor family, and we had times when we didn’t know where our next meal was coming from,” Griffith told Annuity.org.
Those hard times growing up drove home the importance of having a steady income in Griffith’s later years. But as high school was ending, he didn’t have a lot of opportunities starting out.
Counselors and teachers weren’t much help either.
“I was in the top third of the class, but they wouldn’t talk to me about college education opportunities because I was socially, economically disadvantaged,” Griffith said.
Setting Sail in a Changing World
After high school, he worked construction and got an associate’s degree in construction technology before joining the Navy with an eye on his future. If he served 20 years, he’d qualify for a lifetime monthly pension. Today, the retirement benefits are calculated at 2.5% times your highest 36 months of basic pay. And it’s determined by your years of service.
But Griffith’s hitch in the Navy started as the Cold War was ending. With the Soviet threat gone, the services began drawing down forces. When it came time to reenlist, Griffith’s job was among those cut.
“I knew when I left active duty in the military, I walked away from an active-duty pension, which was essentially a lifetime annuity that would last for my lifetime and my spouse’s — and I didn’t really have a choice in it,” Griffith said.
Instead, he enlisted in the Army National Guard and later with the Naval Reserve. But both enlistments ended before the time he needed to lock in with a military pension.
“I ended up working for a state government and it ended three years short of having a guaranteed pension.”
It was the third time in his lifetime that a pension — a guaranteed income stream for retirement — slipped away.
“So that’s kind of weighed on the back of my mind. These people had the opportunity, they were guaranteed it. All they had to do was just finish their time, and they chose not to walk away from it.”
Planning a Future and Managing Risk
Going back to college, Griffith studied finance. He would turn to accounting, running his own business while teaching at the University of Central Oklahoma and later at Iona University. But his personal experiences helped him focus on one aspect of his education — risk management.
This brought him back to pensions and annuities.
Around the same time Griffith was starting out on a career, private-sector pensions were disappearing as businesses shifted to 401(k) and other retirement savings plans. While plans allow you to save, they don’t guarantee a lifetime income stream like pensions.
“And that was a big flaw we made in the 1980s, when we made that shift,” Griffith said.
On top of that, businesses, unions and even state governments raided pension funds to pay bills.
“I had a client who was a union negotiator in the 1970s, and he said he was guaranteed a six-figure retirement check,” Griffith said.
His client relied on that promise and never saved anything more for his retirement.
“His six-figure retirement check, when he actually got it at age 62, was down to — I think he said it was $542 a month,” Griffith said.
Shaping His Own Future With Annuities
Annuities, like all financial instruments, have a degree of risk. But they are typically lower risk than stocks. Financial advisors typically suggest investing in a mix of stocks and bonds to manage your risk.
Griffith began replacing bonds in his portfolio with annuities. The idea being that he’d generate the lifetime income he’d chased instead of just building savings.
“If I put money into joint lifetime annuities, my spouse and I — whoever lives the longest — gets that benefit,” Griffith said.
And if they both die, his annuities pass on to their heirs.
And unlike bonds, annuities may be insured up to a point by your state’s guaranty association if the issuer becomes insolvent. That provides some degree of risk management.
Pensions once promised Americans a secure income in retirement. Their disappearance has put retirement planning largely into the hands of individuals. Annuities have become increasingly popular in recent years, breaking all-time sales records in two consecutive quarters in 2022, according to LIMRA, a financial services trade association.
In 2019, the federal SECURE Act allowed workplace saving plans to offer annuities. The act itself — and the subsequent SECURE 2.0 Act that passed in late 2021 — signaled a rethinking of how Americans save for retirement, as demonstrated by Griffith’s plans.
Traditional retirement accounts allow you to build retirement savings. But it can be difficult to plan how to spend that savings, so you don’t outlive it. Meanwhile, fixed rate annuities, among some other types of annuities, guarantee a specific payout every month, quarter or year for the rest of your life — depending on how you set them up.
“It’s better to have something that’s guaranteed than to have something that’s a what if,” Griffith said. “It’s that uncertainty we’re trying to control.”
3 Cited Research Articles
- USA.gov. (2023, January 18). Military Pay and Pensions. Retrieved from https://www.usa.gov/military-pay
- Fidelity. (2023, January 3). SECURE 2.0: Rethinking Retirement Savings. Retrieved from https://www.fidelity.com/learning-center/personal-finance/secure-act-2
- LIMRA. (2022, October 27). LIMRA: Another Record-Breaking Quarter for U.S. Retail Annuity Sales. Retrieved from https://www.limra.com/en/newsroom/news-releases/2022/limra-another-record-breaking-quarter-for-u.s.-retail-annuity-sales/
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