For many retirees, the past 10 years couldn’t have worked out any worse. Some industry experts call it the “lost decade” for the stock market. Many hard-working Americans are just calling it “lost” and see no hope in sight. So, how can you help people who need more income in retirement?
A quick answer to the retirement dilemma could be suggesting that your clients go back to work. There are two immediate problems with this recommendation. It assumes (1) your clients are healthy enough to work, and (2) there is someone willing to hire them. With unemployment at historic highs, this may not be the right option. Even if your clients can find jobs, will the income they receive fill the gaps left by losses in the stock market?
Maybe there is a better solution. Many insurance companies offer immediate annuities. If you haven’t heard of immediate annuities in the past, the concept is very straight forward. When you invest your money into an immediate annuity, the insurance company will guarantee you a payment, similar to a pension. There are several payment options available, and you should be sure to use the right option for your clients.
For example, the payments can be guaranteed for the life of your client. In other words, they can’t outlive their money. Or they can be guaranteed for a certain period of time (e.g., 10 years).
Additionally, there is no stock market risk. Of course, since annuity payments are guaranteed by the insurance company that issues the annuity, consumers would do well to select a highly rated carrier.
There are no real silver bullets when trying to tame a long, bearish market. The best we can hope for is to reduce a client’s risk exposure and find creative ways to increase the payment yield. If you can do that effectively, you can help your clients weather a tough storm in case this lost decade endures.
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