Interest in assured income flows has never been stronger. The Following are some thoughts on how those flows can be achieved.
First, a look at the current situation. The need for income flows is being driven by the financial distress in which this country sees as the result of recession, market excesses of the past, and major government deficits.
In total, these factors have led to the recognition that neither the government nor the employer has the means to help provide for retirement income or benefits during the senior years beyond what already exists.
Further, it is quite clear that benefit expectations for Social Security are unrealistic in light of demographic patterns. It is probably safe to say that Americans in their late 50s or younger will have to work longer to get full benefits, and the full benefits they get may be reduced from those payable today.
It is equally realistic that Americans will have to work longer to build up other sources of wealth to enable them to manage during their retirement years.
Okay, so Social Security will provide one level of a monthly retirement benefit, at levels well below those that retirees will need to live a decent retirement.
With interest rates low and perhaps likely to remain so, alternative investments to provide additional retirement income are going to garner attention.
These investments include those yielding returns that are related to financial markets. Despite the mixed performance of markets over the past few years, I suspect that better alternatives simply do not exist.
In addition, indexed vehicles will likely continue to receive significant attention, in large part due to their downside protection.
I will go off the deep end and suggest that significant opportunity exists with indexed income vehicles.