If we take a holistic approach to financial planning, we include numerous insurance components in our clients’ plans. We help them insure their lives, health, wages, cars and homes. Doesn’t it also make sense to protect and insure their retirement income?
Retirees have worked hard for many years to build their retirement nest eggs. They want to know their savings are protected and can work for them when they’re no longer working. Defined benefit pensions have virtually disappeared, so the need for a similar, pensionlike benefit has never been stronger.
Bring on annuities — the only products that can provide retirees with a guaranteed income for life, no matter how long they live. Annuities are the best insurance we can offer to people who worry they might outlive their savings.
I started my profession helping educators plan for retirement and used annuities from the very start with TSAs — tax-sheltered annuities — in the 403(b) market. As my practice has grown to include clients from a broad variety of professions and backgrounds, I’ve found that annuity products offer a great solution for many of my clients.
The numbers and science make sense — annuities work. They spread retirement income risk among thousands of clients over many years to provide security. Annuities also make sense from an emotional standpoint. I live in Florida, aka “heaven’s waiting room,” where our many retirees need and desire protected retirement income. My clients love both receiving protected income from their retirement annuities, as well as not having to worry about market volatility derailing their retirement plans.
During times of large market swings such as those we’ve had recently, it really makes client reviews much easier when I can soothe client concerns by talking about their protected income. The benefits go far beyond making my job easier. Studies show that retirees who don’t have to worry about their portfolio, whose income is protected, live longer, happier lives.
Annuities for all occasions
Very few financial products are one-size-fits-all, and annuities are no exception. As advisors, we serve our clients’ best interests by having an open mind about newer types of annuities and how they can meet our clients’ specific retirement income needs or offer solutions based on clients’ unique situations.
Certain annuities can provide what some might consider nontraditional benefits, including enhanced death benefits, tax-deferred growth, long-term care benefits and more. Registered index-linked annuities are an example of that. Also, many annuities have significantly shorter surrender charge periods than they did in past decades, providing greater flexibility for the various solutions they provide. Rising interest rates have enhanced many withdrawal rider benefits as well.
I use a “bucket” approach to retirement planning. Different buckets have different purposes to serve different types of clients. These buckets typically include a mix of mutual funds and annuities as part of a client’s overall portfolio.
The great news for advisors is that there is a lot of information available to help us and our clients understand the benefits of annuities.
I love the Alliance for Lifetime Income’s many resources and materials, including many that are client-friendly and ready-made for use in social media. I also love how the alliance has sponsored the Rolling Stones’ last two concert tours and Elton John’s Farewell Yellow Brick Road our, literally playing to our audience — baby boomers seeking a secure retirement!
Another good source of consumer information is NAIFA’s FinancialSecurity.org website. Being a NAIFA member, I have access to some of the industry’s foremost experts, including people such as Tom Hegna and Moshe Milevsky, in my professional network.
Most annuity providers also have wonderful general marketing information and third-party materials about how annuities can help clients.
June is National Annuity Awareness Month, and it’s the perfect time to help our clients understand the value of these important planning tools. Having annuities available among our many products and services truly bolsters and supports our ability as financial professionals to help build brighter tomorrows for our clients.