As affluent retirees’ worries about their financial well-being continue to mount due to the market and economic swoon, sales of immediate annuities are seeing a significant spike.
While new fangled products with lots of bells and whistles continue to flood the retirement planning market, immediate annuities provide a simple distribution vehicle for retirement income, says Bryan Place, an advisor and president of AnnuityQuickQuote, an immediate annuity online shopping service.
In fact, Place points out that while numbers for all of 2008 are not yet compiled, immediate annuity sales through the third quarter increased 26% over 2007, reaching $5.9 billion, according to LIMRA. “The [S&P 500] was relatively well behaved through the end of the third quarter, only falling 13.1% ” Place says. “ Much of the markets losses came in the fourth quarter last year, with the S&P 500 falling more then 23% for the quarter. So even though we don’t have full year immediate annuity sales figures, I fully expect the numbers will reflect that sales continued at the rapid pace we saw through three quarters as investors sought the safety that immediate annuities offer.” The volume of immediate annuity business through AnnuityQuickQuote “increased substantially in the second half of 2008 in all parts of the country,” Place notes. “In the majority of the conversations I have had with clients they have focused on safety and sustainability of income, stating that this is reason they chose the immediate annuity.”
Indeed, study after study these days is revealing retirees’ search for guaranteed income streams. The most recent survey of affluent retirees performed by MFS Investment Management found that they “expressed significantly lower levels of financial comfort, greater concern about further major market declines, and higher interest in guaranteed income streams for retirement” than the same survey segment did just last August, immediately prior to the precipitous market sell-off.