Annuities: Friend or Foe?

Mike McGlothlin, CHFC®, CLU®, CFP®, LUTCF®

Annuities. I’ve talked a lot about them, and I believe strongly in their value in a sound retirement plan. But despite what they can do for our clients, they need a reputation overhaul. We tend to think of them more as a necessary evil than as an essential resource for guaranteed income. They are the dreaded A-word.

Let’s change that. Last week, I talked about why annuities provide that needed drag to obtain maximum life when it comes to achieving maximum success. And in today’s market, that lift is more important than ever. But instead of just talking about it, it’s important to look at the numbers. What’s changing today that makes income so important? It starts with market size. More and more Americans are shifting from workforce to retirement, and we need to shift our focus to properly hit their needs.

There are three main components to be aware of:

  1. Only 51% of Americans believe that their retirement assets will last for their entire lifetime. That means our population basically has the same odds of a coin flip. One person feels they have enough income to provide for their lifetime, the next does not feel that way.
  2. We’re seeing dramatic drops in government programs today. Social security is scheduled to drop as much as 24% in about 10- 12 years. For most Americans, that’s a significant hit. Think of your clients. Would they still have enough to retire is Social Security decreased dramatically?
  3. If they have protected income in their portfolio, 78% of Americans believe that they will have income for as long as they live. For those without protected income, that number drops to 41%.

So, if we go by the numbers, it seems clear that clients are interested in protecting their income in retirement, and that government programs, such as Social Security, won’t be enough on their own. And that means it’s time to get comfortable with annuities. You’ll have a better chance of attracting quality people and therefore gaining assets under management.

Take the first step and talk with a retirement income consultant. They can walk you through our proven Income Alpha approach that allows you to increase your clients’ guaranteed income without sacrificing assets under management. It’s still Annuity Awareness Month, the perfect time to increase your probability of success and change the way you think about annuities. Call (800- 589-3000 for more information.

Transformational Tactic

It’s time to change the way we think about annuities. Use our Income Alpha approach to provide guaranteed income, and a brighter retirement, to your clients.

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