Pacific Life Secure Income Annuity Review
Begin Planning for a Confident Retirement
Everyone has an idea of what retirement looks like. For some, that may mean the chance to travel or get involved in charity work. Others may want to relax and spend time with family. Whatever you choose to do in retirement, you want to do it with confidence. And since people are living longer than ever, you have to be prepared for a long retirement.
The following chart shows the likelihood of a 65-year-old living to age 75, 85, or 95.
|Liklihood of Living to Age||Male||Female||One Member of a couple|
|Source: Annuity 2000 Basic Mortality table, projected with scale G. More recent data may alter these assessments or outcomes.|
In addition to greater life expectancy, many people today do not have a pension plan available to them, and Social Security may not be enough to cover all essential and non-essential expenses. With this in mind, how can you be confident you will have the guaranteed income you need in retirement?
Pacific Secure Income is a fixed, deferred income annuity that can provide guaranteed income at a future date. It can be an efficient way to maximize future income because the longer you wait to start receiving income payments, the higher your income amount will be.
Guarantees are backed by the financial strength and claims-paying ability of the issuing company.
How does a deferred income annuity work?
A deferred income annuity can be purchased with a lump sum or a series of purchase payments. The money you put into the product generates an income stream that begins on a future date that you choose.
With a deferred income annuity, you are not invested in the market, meaning you will not be exposed to market fluctuations. It may be ideal if you are saving for retirement and don’t need income today, but want to lock in predictable, uninterrupted income payments guaranteed for your life, the lives of you and your spouse, or for a specified period of time, in the future.
Reasons to Consider a Deferred Income Annuity
Security of Pension-Like Income
By allocating a portion of your retirement assets to a deferred income annuity such as Pacific Secure Income, you receive the security of a future stream of income payments guaranteed to last as long as you choose— either for a specific number of years or for your entire life. And often, a good retirement strategy may need to help provide security for two people. Pacific Secure Income offers guaranteed income that can last throughout your life and the life of your spouse.
If you don’t need to take income now, the annuity can be established as a Qualified Longevity Annuity Contract (QLAC), to provide you the opportunity to defer a portion of your required minimum distributions up to age 85. By deferring a portion of income to a later date, you delay paying taxes on money you may not need early in retirement.
Ability to Create the Income You Need
With Pacific Secure Income, you can make a lump-sum purchase payment or make multiple purchase payments in order to build income at a pace that’s comfortable for you. Purchase payments can be made regularly or intermittently at any time from contract issue until 13 months prior to your income start date. Each time you make a purchase payment, your future income amount will increase.
I contacted Immediate Annuities.com to buy one of my immediate annuities. They were prompt, very responsive, paid attention to detail, understood my objectives, and were superb when it came to staying on top of seeing the funds transfer and issue of new policy documents through to completion.
Additionally, Pacific Secure Income gives you the option of structuring an income stream that will increase each year, which can help you keep pace with inflation.2 Please note: A Pacific Secure Income contract does not provide a cash surrender value.
Flexibility for Life’s Changing Circumstances
Pacific Secure Income provides flexibility if your circumstances change in the future. If you need income sooner than originally planned, you have the option to advance your Annuity Payment Start Date—the day when income payments are scheduled to begin—up to five years. Or, if you don’t need income as quickly as anticipated, you can defer your Annuity Payment Start Date up to five years. (Subject to your required minimum start date for a qualified contract or contract annuity start date for non-qualified.)
Once you start taking income, there are options that allow you to access larger portions of your guaranteed income payments, which can help you address any unforeseen needs.
Create the Income You Need
Pacific Secure Income offers several annuity income options that determine the way income payments are distributed while the annuitant is living. These options also determine what happens to any remaining guaranteed income payments upon the annuitant’s death if death occurs after income payments have begun.
You also can choose the frequency that you receive your income payments—monthly, quarterly, semiannually, or annually—helping you to find just the right fit to meet your income needs and financial goals. Income payment amounts will differ based on the annuity income option and period selected. Usually the longer the payout period, the lower the periodic payment amount.
|Annuity Income Options (Subject to state and firm availability)|
|Period Certain||Income payments last for a specific time you choose, up to 30 years. The time period selected will impact the amount of your income payment. If the annuitant dies during the specified time, the remainder of the payments will continue to be paid to the beneficiary.|
|Life Only||Income payments are guaranteed for as long as an annuitant is living. This option provides the highest payment amount for one life.|
|Life Only with 100% Return of Purchase Payments Death Benefit||Similar to the Life Only annuity income option, payments are guaranteed only as long as an annuitant is living. However, this option adds a death benefit equal to 100% of the purchase payment if death occurs prior to the annuity income start date.|
|Life with Period Certain||Lifetime income is guaranteed for a minimum period of up to 30 years. If an annuitant lives beyond the specified period, payments will continue to be made for life. If the annuitant dies during the specified time period, payments will continue to be made to the spouse or beneficiary for the remainder of the time period.|
|Life with Cash Refund||Income payments are made for the life of the annuitant. When the annuitant dies, if there is any remaining purchase payment amount, it will be paid to the spouse or beneficiary as a lump sum.|
|Life with Installment Refund||Similar to Life with Cash Refund, income payments are made for the life of the annuitant. When the annuitant dies, if there is any remaining purchase payment amount, it will be paid to the spouse or beneficiary in installments.|
You can choose to begin receiving income as soon as 13 months—or up to 30 years—from contract issue. For qualified contracts (excluding Roth IRA), the income cannot begin any later than age 70½, age 85 for QLAC, and for nonqualified contracts and Roth IRA, income cannot begin later than age 90. Talk with your financial professional, who can give you more information about each option and help guide you in making your selection. After you choose an annuity income option and frequency for income payments at the time the contract is issued, you cannot change it later.
Joint Life Annuity Income Options
Pacific Secure Income offers a number of Joint Life options if you need income to last throughout the lives of two individuals—yourself and your spouse. All the annuity income options listed on the previous page, except for the Period Certain option, are available in a Joint Life or a Joint and Survivor Life version.
When you structure your contract, you can decide what happens to your income stream when one spouse passes away, before or after annuity income payments begin. The surviving spouse can continue to receive the same income or a percentage of that income—50%, 67%, or 75%. If you choose to reduce income when one person dies, you will receive a higher amount of income while you are both living. Payments can be reduced upon either person’s death with the Joint Life options, or upon the primary annuitant’s death with the Joint and Survivor Life options.
Another option to consider when structuring your contract is the Inflation Protection Option. This optional feature allows you to receive an annual payment increase of either 2%, 3%, or 4% after annuity income payments begin to help keep pace with cost-of-living increases. It’s like giving yourself an annual pay raise, and helps protect against inflation eroding the value of your savings and reducing your purchasing power. The amount of your initial income payments will be adjusted based on your selection of an annual income increase.
Flexibility for Changing Circumstances
Selecting the right annuity income option is just one way Pacific Secure Income can be tailored to fit your needs. But since life can be unpredictable, it also gives you the flexibility to address tomorrow’s unforeseen changes.
Annuity Payment Start Date Adjustment Feature
Prior to receiving annuity income payments, you have a one-time opportunity to begin taking income earlier, or defer taking income until later—up to five years in either direction. Changing your Annuity Payment Start Date will adjust the amount of your income payments. The longer you defer taking income, the more your income payment amounts will be. If you begin taking income sooner, your income payments will be less. You can contact Pacific Life to determine the exact amount of your income payments.
The Annuity Payment Start Date cannot be advanced any sooner than 13 months after contract issue or the date of the last purchase payment, and may not be deferred any later than 30 years after contract issue. Not available with the Life Only, Joint Life Only, Joint and Survivor Life Only, or Period Certain annuity income options. For Traditional IRAs, your Annuity Payment Start Date may not begin any later than age 70½ and age 85 for QLAC. For nonqualified contracts and Roth IRA, your Annuity Payment Start Date may not begin any later than age 90. This feature is subject to state and firm availability.
Income Payment Acceleration
After annuity income payments begin, if you have chosen to receive monthly annuity income payments, you may request an amount equal to three or six times your normal monthly payment. After a request for a three-month payment, normal payments resume in the fourth month; after a six-month payment, normal payments resume in the seventh month. This feature is available on or after reaching age 59½, may be utilized a maximum of two times, and is subject to state and firm availability. After using the feature, you must receive at least one normal monthly income payment before you may use the feature again.
Access to a Larger Portion of Your Money
Another way to access a larger portion of your guaranteed income payments is to make a withdrawal. This opportunity is available only on nonqualified contracts, after annuity income payments begin, and on or after you reach age 59½. You may withdraw up to 100% of the present value of your remaining guaranteed income payments as a lump sum. There is no limit to the amount of withdrawal requests you can make. Withdrawals are not available with all annuity income options and are subject to state and firm availability. Making a withdrawal will lower or may stop your remaining guaranteed income payments. However, with the exception of the Period Certain option, if you are still living at the end of the period when your remaining guaranteed income payments would have stopped, Pacific Life will resume income payments until your death.
Please note, if you elect the Income Payment Acceleration feature, there is a six-month waiting period before you can make a withdrawal request. Likewise, if you make a withdrawal, there is a six-month waiting period before you can elect the Income Payment Acceleration feature.
If you adjust your Annuity Payment Start Date, you must wait six months before using the Income Payment Acceleration feature or before making a withdrawal.
Help Provide for Your Spouse and Heirs
While it is important to plan for your retirement income needs, you also want to be sure that your spouse and loved ones will be taken care of when you die. Pacific Secure Income can help you pass on your financial legacy to your beneficiaries.
Before Annuity Income Payments Begin
Before annuity income payments begin, most of the annuity income options provide a death benefit—meaning, if you should pass away before your Annuity Payment Start Date, your surviving spouse or beneficiaries will receive an amount equal to 100% of the purchase payment(s). Keep in mind, the Life Only annuity income option (and corresponding Joint Life Only and Joint and Survivor Life Only income options) do not provide a death benefit should death occur before the Annuity Payment Start Date.
To provide for your spouse, you may structure your contract so that if death occurs before annuity income payments begin, your spouse can continue the contract.
After Annuity Income Payments Begin
There are a number of annuity income options or Joint Life annuity income options you can select that will provide for your loved ones even after your annuity income payments begin.
Who’s Who in an Annuity
It is important to know who the key parties are in an annuity contract.
The owner makes the decisions about the annuity, such as how much money to put into the contract. The owner also names the beneficiaries. Any joint owner must be a spouse.
The owner and the annuitant must be the same person (unless the owner is a non-natural person). Any joint annuitant must be a spouse. It’s the annuitant’s life expectancy that is used to set the dollar amount of future annuity income.
If the owner or annuitant dies before annuity payments begin and there is no surviving spouse as an annuitant, usually, the beneficiary is the one who may have the right to receive the death benefit.
Why Pacific Life
Pacific Life has more than 145 years of experience, and we remain committed to providing quality products, service, and stability to meet your needs today and throughout your lifetime.
Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state.
It’s essential for you to choose a strong and stable company that can help you achieve your future income needs.
Pacific Life Insurance Company is organized under a mutual holding company structure and operates for the benefit of its policyholders and contract owners.
We have achieved ongoing recognition for high-quality service standards.
We offer products that address market environments during all stages of your life.
We maintain strong financial strength ratings from major independent rating agencies.