The Annuitization Puzzle


"It is a well known fact that annuity contracts other than in the form of group insurance through pension systems, are extremely rare. Why this should be so is a subject of considerable current interest. It is still ill-understood."

Franco Modigliani

Nobel Prize in Economics Acceptance Speech, 1985

In his Nobel Prize acceptance speech given in 1985, Franco Modigliani drew attention to the “annuitization puzzle.” Why don't more retirees annuitize part of their retirement savings, guaranteeing a lifetime income?

With longer life expectancies, fewer pension plans, doubts about Social Security, and market volatility, it’s a challenge to feel secure about your retirement income. That’s why many people are turning to annuities.

An annuity is a contract between you and an insurance company that can help you put away money for retirement on a tax-deferred basis and provide an income stream during retirement that is guaranteed to last your entire lifetime. You can decide when and if that income stream starts—now or in the future—and you have options that will provide for your loved ones after your death.

Annuities can be a smart way to diversify or add to your retirement plan if you’re concerned about outliving your income. They are also an effective vehicle to help fixed-income investors defer ordinary income. And annuities are uniquely designed to help you manage longevity risk by incorporating mortality factors into your retirement distribution strategy, potentially increasing your probability of success.

All annuity guarantees are backed solely by the claims-paying ability of the issuer.

There are two stages to annuity ownership:


The accumulation stage targeting retirement income in the future, and the annuitization stage, targeting lifetime retirement income now or in the future.



Looking for a tax-deferred way to save for retirement? Eusebius Advisors offers a number of deferred annuities to help you reach your long-term retirement goals.

Fixed Annuities

Fixed annuities earn a guaranteed rate of return backed by the claims-paying ability of the issuing insurance company over the life of the contract, and offer contract owners the predictability of a guaranteed income stream and a way to grow assets without exposure to market volatility.​

​Eusebius Advisors features fixed annuities from:

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​Fixed Indexed Annuities

Fixed index annuities are retirement vehicles that offer a unique combination of growth potential (via interest based on one or more market indexes) and the protection of standard and optional guarantees — all designed to help you pursue your long-term financial goals.

Eusebius Advisors features fixed indexed annuities from:​


Variable Annuities

Variable annuities are long-term, tax-deferred investments designed for retirement, involve investment risks and may lose value. During the accumulation phase of a variable annuity, money paid into the contract (called a premium) is allocated to investment portfolios (called subaccounts) where earnings have the potential to grow tax-deferred.

Many variable annuities offer a wide array of investment choices, thereby allowing you to create your own investment strategy among the various subaccounts.

Eusebius Advisors features the Lincoln Investor Advantage and Jackson National Elite Access variable annuities, with available separate accounts featuring our principal investment partners.

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If you’re retired or are planning to retire soon, the question foremost on your mind is probably: "Have I saved enough to enjoy retirement without worrying about running out of money?"


Are you retired or planning to retire in the next year or so? Consider an immediate annuity to turn your retirement savings into a guaranteed stream of income payments.

You can retire with confidence when you choose an income annuity to provide guaranteed, predictable income that you can’t outlive. You can choose an annuity based on whether you want a payment that is fixed, increases by a specific percentage each year, or, with a variable income plan, has the potential to grow with markets and provide a hedge against inflation.

Fixed versus Variable Income Plans


A fixed income plan offers a high level of safety and predictability. It provides income payments that either remain the same or start out slightly lower and increase annually by a percentage of your choice. In either case, your payments are guaranteed to never decrease. Some fixed income plans may also allow the withdrawal of some of your future payments to use if there is an unexpected event. A fixed income plan may be right for a portion of your retirement savings if you are concerned about your account losing value due to market risk, or if you are trying to offset the risk in your other retirement funds and investments.

With a variable income plan, your payments will fluctuate according to the investment performance of the funds you've chosen. The amount of your payments is not guaranteed: you have the potential to benefit from investment gains, but you also assume the risk of investment losses. The variable income plan may be right for you if you are seeking a hedge against inflation or increasing health care costs as you age, and you are willing to accept some market risk.

When choosing an income plan for your retirement, you have a number of choices - you can choose income for a lifetime (or two) or a specific time frame:

  • Period Certain: Payments are guaranteed to you or a beneficiary for a certain number of years, for example, five, ten or twenty years. This option can also be added to any life plan to make sure payments are made for a minimum number of years.

  • Single Life: Get guaranteed income payments for the rest of your life. This option offers the highest periodic payout since there is no guarantee of a minimum number of payouts. However, there is the risk under this option that the recipient would receive no payouts if the Annuitant dies before the date set for the first payout; only one payout if death occurs before the second scheduled payout, and so on.

  • Single Life Refund: You receive guaranteed income payments for the rest of your life. If you should die during the payment phase and all of the income you've received to date doesn't equal your original deposit, payments will continue to your beneficiary until the premium amount is refunded.

  • Single Life with Cash Refund: Once you start receiving income payments, any portion of your initial contribution that remains when you die will be paid to your beneficiary in a lump- sum amount … guaranteed!

  • Single Life with Period Certain: You receive guaranteed income payments for the rest of your life, but if you die within the period certain – typically from five to twenty years – the income will continue to be paid to your beneficiary for the remainder of that period.

  • Joint Life or Joint Life with Survivor: Income is paid for your lifetime or the lifetime of your Joint Annuitant (your spouse or other loved one you've named in your contract), whichever is longer.

  • Joint Life or Joint Life with Survivor and a Period Certain: Income is paid for your lifetime or the lifetime of your Joint Annuitant, depending on who lives longer. If you both die before within the Period Certain, the income will continue to be paid to your beneficiary for the remainder of that period.

  • Joint Life with Survivor and Cash Refund: Income is paid for your lifetime or the lifetime of your Joint Annuitant, depending on who lives longer. Upon the death of the surviving Annuitant, any portion of your initial contribution that remains will be paid to your beneficiary in a lump-sum amount… guaranteed!

Moshe Milevsky - Why Annuities?


Barry Stowe on “Financial Freedom


Introducing Lincoln Investor Advantage

Lincoln Financial

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