On the cutting edge of the baby boom generation, former President Bill Clinton, turned 61 in 2007. There’s not much time before he, and others, turn 65. Will they be ready to retire?
Commercials and other marketing materials show retirement as being a time of activity, not rest. They speak of retirees creating new beginnings, not preparing for the end of life. But, given today’s economic challenges, how can such outcomes possibly occur for many of those boomers?
Consumer-friendly annuities can be part of the solution.
While perhaps not as sexy as other types of investments, annuities can be the perfect solution to help customers get over their fears of today’s challenging economy. Now is the time for advisors to seize this opportunity. Whether the goal is accumulation, distribution or even covering living benefits such as long term care, annuities can be the answer. Here are some product advantages about which boomers should know.
Accumulation. For those who still need to accumulate in the pre-retirement phase, there are annuities with interest rate guarantees for multiple durations. Everything from 2- to 10-year rate guarantees is available from dozens of insurers.
What about addressing needs of customers who are concerned about bond volatility? Products with upside potential tied to a U.S. Treasury index can be a good alternative to bonds. One annuity company offers a product with a minimum interest rate guarantee but also helps offset inflation with interest crediting that is tied to the 5-year U.S. Constant Maturity Treasury rate. This provides less volatility than using a regular bond index.
For customers who do want the possibility of more upside potential with downside protection, consumer-friendly fixed index annuities can be the answer. Currently, some insurers are taking a new direction with these products, offering features such as performance-based triggers. Here, the customer gets a strong fixed rate but if the index has any positive movement (even 1 basis point) during the next year they get a very strong credited rate.