Do you know your clients’ biggest worries? A 2018 study from Greenwald & Associates found that investors worry about outliving their retirement savings amid rising healthcare costs and market volatility.
Nearly three-quarters (73%) of respondents consider guaranteed income to be highly valuable, more than a 10% increase over prior year results.
As a financial professional, you know that the word “guarantee” should not be used lightly. But when you bring certain types of annuities into the mix your clients may get the guarantee they are searching for.
Few guarantees in finance
In personal finance, there are few guarantees. The stock market goes up and down with the changing winds of the economy and politics. With any swing in the market, memories of past recessions and market drops may come to mind, and that can push many investors to want to sell and get their money out, even though that may be a costly decision in the long run.
As the Greenwald study highlights, investor worries go far beyond changes in the Dow Jones Industrial Average and S&P 500. As lifespans increase, so do healthcare costs and long-term care needs. This can lead to worries about outliving savings and an inability to afford basic care needs.
Outside of Social Security, there are few income sources a retiree could look to as “guaranteed,” and there is even some risk of lower Social Security benefits as the result of political shifts. To put investor fears at ease, it is important to offer a mix of investment products and options to manage risk and support long-term needs.
A comfortable lifestyle in retirement
The goal of most retirees is to maintain the same standard of living in retirement that they enjoyed in their working years. To do so requires a combination of managing expenses and building stable sources of income.
Social Security and personal savings aside, annuities are one of the few investment vehicles that can provide guaranteed income for your clients. Survey responses showed that those who want guaranteed income in retirement are worried about not being able to afford long-term care expenses (34%), the possibility of losing assets in the stock market (33%) and outliving retirement savings (30%).
Going beyond Social Security, American investors have other options to build a sustainable income in retirement. Those include various types of annuities. For example, an indexed annuity can help your clients plan for a secure retirement by allowing their money to grow with principal protection. Annuities offer a guaranteed lifetime income after a lump-sum investment or series of investments during the accumulation phase of the annuity. Many also offer guaranteed income by way of an income rider that clients could utilize during the accumulation phase. An income rider will likely include specific conditions and carry an additional expense.
Annuities can be a useful investment vehicle for retirees as the planned income can complement Social Security and any other retirement assets to provide a diverse, stable income in the future. When your clients purchase an annuity, they begin a long-term relationship with the issuing life insurance company. Your clients want to be sure that company has the experience, character and financial strength to serve them now and in the future. Your clients want to be confident that the company will back its promises for the long term.
Manage uncertainty with the right long-term plan
As perceived value of guaranteed income grows, stacking Social Security, annuities and traditional retirement plans is often an effective way to achieve stable income. With the right annuity, you can provide clients with a versatile source of guaranteed income, something many soon-to-be retirees may find quite valuable.
With the right products and planning in your arsenal, you are in a strong position to help turn your clients’ retirement goals into reality.
Product guarantees are backed by the financial strength and claims-paying ability of the issuing company.
Annuities are intended as vehicles for long-term retirement planning, which is why withdrawals reduce an annuity’s remaining death benefit, contract value, cash surrender value and future earnings. Annuities also may be subject to income tax and, if taken prior to age 59 ½, an additional 10% IRS tax penalty may apply.
Annuities are not a deposit, not insured by any federal government agency, carry no bank or credit union guarantee, are not FDIC/NCUA insured and may lose value.
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