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Where annuities fit into modern financial strategies for a better retirement

In the past, it was possible to enter retirement with little concern about money, because the combination of a company pension, Social Security benefit and personal savings was often enough to carry someone through retirement. Today, that scenario has drastically changed. With Social Security representing over of all retirement income, retirees are left to come up with about 60 percent of the money they鈥檒l need from other sources.

Today's retirees are left to come up with
60%
of their retirement income.

Painting an accurate annuity picture

Some consumers may have misconceptions about annuities and the benefits they provide. You may have heard from your clients that they think annuities are too expensive or complex and are hesitant to explore them as an option for retirement planning. However, today鈥檚 annuities offer features and flexibility that didn鈥檛 previously exist and can play an important role in meeting the diverse and changing needs of today鈥檚 retirement savers.

鈥淔inancial professionals and retirement savers need to know that the tax benefits, downside protection from market loss and growth potential they seek in a retirement savings vehicle can all be found in an annuity,鈥� adds Adam Politzer, Chief Product Officer at 麻豆传媒. 

Both FIAs and RILAs provide a level of protection from market losses and can be used as vehicles for tax-deferred accumulation.* As you begin the retirement planning conversation, you can help dispel any misconceptions your clients may have about annuities.

Meeting the diverse needs of retirees

Annuities have been around for centuries, and while much has changed through the years, the main purpose of the annuity remains the same: to help people manage the risk of outliving their money. 鈥淪upplementing a retirement portfolio with a FIA or RILA can help your clients pursue growth opportunities, while adding a measure of protection from loss if the markets go down,鈥� says Kvalheim.

Indexed annuities can help build a more confident retirement by bringing three key benefits to an income strategy:

• Growth potential: Interest crediting based in part on the upward movement of a market index provides opportunities for accumulation not found in fixed income products
• Flexibility: Tools that can provide liquidity for unplanned needs
• Stability:  Reduce the risk of losing principal due to market downturns

RILAs offer greater growth potential through a level of exposure to market risk. A RILA may be a suitable match for someone who is comfortable with financial risk, but wants a portion of their retirement savings to have some protection from market volatility.

Many FIAs and RILAs also provide the option of a guaranteed retirement 鈥減aycheck.鈥�

Creating a customized retirement plan

Kvalheim explains, 鈥淥ne common theme in retirement strategies is the need for flexibility, because not only is life unpredictable, but a person鈥檚 needs and goals can change as they age. Many FIAs and RILAs include features that can bring clients additional confidence, like free withdrawal options, terminal illness and confinement waivers and the ability to create a legacy through a death benefit.鈥� They may also provide the option of a guaranteed retirement 鈥減aycheck,鈥� where a client receives monthly income for the rest of their lives.

Recommending an annuity carries weight 

The possibility of longevity, rising health care costs and inflation are just a few of the risks retirees face in the years ahead. Modern annuity designs may help provide a solution for these challenges and offer you and your clients a useful tool for retirement planning.

According to research, a majority of Americans (58 percent) would be more inclined to consider purchasing an annuity if their financial professional or another trusted source recommended it. As their financial professional, your clients may be looking to you as that trusted source.

58%
of Americans may be more inclined to purchase an annuity if their financial professional recommended it.

Since the responsibility for a financially secure retirement falls mainly on the retiree, the need for an effective retirement income strategy is more important than ever before. Annuities can be an important part of a solution that could help your clients retire better.

Insights on 麻豆传媒 Connect. Tips, tools and resources to grow your business by helping clients retire with confidence.

*Under current tax law, the Internal Revenue Code already provides tax deferral to qualified money, so there is no additional tax benefit obtained by funding a qualified contract, such as an IRA, with an annuity; consider the other benefits provided by an annuity, such as lifetime income and a Death Benefit.

Guarantees provided by annuities are subject to the financial strength and claims paying ability of the issuing insurance company.

Indexed annuities are not stock market investments and do not directly participate in any stock or equity investments. Market indices may not include dividends paid on the underlying stocks, and therefore may not reflect the total return of the underlying stocks; neither an index nor any market-indexed annuity is comparable to a direct investment in the equity markets.

Registered index-linked annuities can only be marketed and sold by securities licensed financial professionals. Any discussion of this product must be preceded or accompanied by the product brochure and prospectus which provides more detailed product information, including all charges or limitations as well as definitions of capitalized terms.

Registered index-linked annuities have a risk of substantial loss of principal and related earnings. They are designed to be a long-term investment product used to help provide income for retirement and are not suitable as a short-term investment.

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