Longevity Risk and the Annuity Answer

Commentary

Longevity is rapidly changing our nation and the world. We are at the midst of the global longevity revolution.

This revolution will have a bigger impact on society and culture than the industrial revolution and the technology revolution. It is something that has never occurred in human history. What is the impact on our nation and the world as the global birthrate drops and the life expectancies continue to extend?

The remarkable 20th century breakthrough in medical sciences has given us a society that is living longer than ever before but now we don’t know how to finance longer life spans?

Today in America, someone is retiring every nine seconds. That means, every nine seconds someone is applying for entitlement benefits. Can we afford it? Can we afford longevity?

Are we prepared for an aging nation, and an aging world? How do we live longer lives that are better lives considering the rising healthcare costs, low interest rates, less from Social Security and increased taxation? Between this year and through 2030, the 65-plus population will grow by more than 70 percent while payroll taxes will grow by less than 10 percent. Where is the money going to come from?

Between 1991 and 2007, bankruptcy filings have increased 125 percent for people between 65 and 74 and 400 percent for people over 75. The bottom line is millions won’t have enough money for the comfortable retirement our parents and grandparents enjoyed.

We are simply facing a national retirement crisis in America. Millions will find that they are too old to return to work and have too little in savings. Half of today’s private sector workers don’t have any employer-sponsored retirement plan and over 2.5 million boomers have less than $1,000 in their net lifetime of assets saved.

The great recession saw a decline from pensions and savings of over $5 trillion. Today, most have recovered but could we survive another economic catastrophe? Not if millions are relying on a monthly income that’s got to last until their last breath.

Americans need a lifetime income, free from the ups and downs of the turbulent storms of Wall Street. Americans for Annuity Protection is an advocate for a solution. It’s the truth and the remarkable use of annuities that safely accumulate savings and provide guaranteed income you cannot outlive.

Annuities are the only product other than Social Security and private and public pensions that guarantee you will not run out of money as long as you live no matter how long you live, AND they also make sure you don’t lose any money when the markets go sideways.

Annuities provide solid retirement confidence in an uncertain world and annuities can make sure extra expenses like education, long-term care and medical expenses are paid. You can even provide for an education or additional income for your children or grandchildren.

A recent landmark article, appeared in the Harvard Business Review called, “The Crisis in Retirement Planning,” by Nobel Prize winner and MIT professor of finance Dr. Robert Merton.  Dr. Merton eloquently stated, “Our approach to saving is all wrong: We need to think about monthly income, not net worth.”

He further states, “Investments cannot deliver security in terms of income.”

If we don’t sound the alarm and educate consumers about the longevity benefits of annuities, the crisis will become a tragedy on a massive scale.

The Longevity Revolution is real and it is already in progress. The natural essential companion is the only vehicle that provides certainty, security, guarantees and a solid predictable income for life with market protection ... the fixed annuity. Let’s not fail society when the solution is and has been successfully managing longevity risk for the last hundred years.

Kim O’Brien is the vice chairman and CEO of Americans for Annuity Protection. She has 35 years of experience in the insurance industry. O’Brien served The National Association for Fixed Annuities (NAFA) for almost 12 years and led the organization to defeat the SEC’s Rule 151A.

Contact Kim at [email protected].

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