Final answer:
Ross is considering converting his annuity into a cash-value life insurance policy to have a steady income for old age, with the possibility of adding extra funds if necessary. This type of policy provides the benefits of a death benefit as well as a savings component. This move is part of broader retirement planning options available in the private market.
Step-by-step explanation:
Ross is considering exchanging his annuity for a life insurance policy, specifically a cash-value life insurance policy. This type of policy offers both a death benefit and a cash component, which can accrue value over time. By making this switch, Ross will have access to the policy's accumulated cash value, which can then be used for his needs during retirement. If the accumulated cash value is insufficient to acquire the desired policy, Ross may consider adding extra funds. This is a strategy that individuals might use to ensure they have enough income for old age.
Private market options for saving for retirement include saving accounts, investing in property, acquiring stocks or bonds, and purchasing annuities. Annuities offer a safer investment with fixed payouts, whereas stocks and bonds offer the possibility of higher returns but with greater risk. Through employers, individuals may also be able to invest in these instruments with special tax advantages, like 401(k)s, which defer taxes until withdrawal.