Is it worth paying a fee for income predictability and reliability? In the final installment of this three-part series, I share a story I use to position income riders to my clients.
As we head into the conclusion of this series, I want to share with you a metaphor that I use when positioning income riders in my retirement planning work with clients. As I shared with you previously, adults tend to learn more from the stories that we hear than from statistics and flow charts. To build successful retirement planning practices, we need to be successful storytellers.
One of the transitions that takes place as we get older and are approaching retirement is a re-ordering of our financial priorities. For instance, when we are younger, we are more comfortable with financial projections (“What might my money be worth?”). When we are older, we tend to look for financial predictability (“What will my money be worth?”).
Similarly, the letters ROI when we are younger stand for “return on investment.” When we are older and approaching retirement, they come to represent “reliability of income.” It is simply a matter of acting our age when it comes to our money. This general principle applies to your prospects and clients.
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Where annuities can fit into an overall retirement plan is in the predictability and reliability of income part of the equation. For instance, there are optional income riders available on many fixed annuities today that, for an annual fee that is typically between 0.50 percent and 1.25 percent, offer a guarantee years in advance of retirement as to how much income your annuity account could generate in retirement.