There are more than 43 million seniors age 65 or older in the United States today, making this community a prime target for annuity sales. However, the matter of how to market ethically to this demographic can be controversial and complex.
First, recognize that some seniors will benefit from buying an annuity and some will not. There can be myriad benefits depending on the age of the annuity purchaser, the type of annuity and the goals of the purchaser. The next factor to consider is the suitability of the annuity for the consumer, based on the potential buyer’s financial portfolio. Finally, to prevent elder abuse, it’s important to take precautions when selling any financial products to this group.
Seniors who are preparing for retirement or are in retirement need to examine their savings, investments and future needs. For some, Social Security and pension plans will not provide an adequate income to cover living expenses. An annuity can supplement income during retirement years, and certain contracts guarantee lifetime payments.
Another reason seniors choose annuities is for the tax advantages. Not only are taxes deferred during the contribution phase, but if the proceeds from some annuities are used to pay for long-term care insurance premiums, it could be tax free.
Further, seniors who are planning to leave money to a spouse or other family members can choose an annuity with a death benefit that provides income to a beneficiary.
Before investing in an annuity, financial experts may recommend that seniors who are still working first max out contributions to employer-match plans like 401(k)s, and create a diverse portfolio to make sure they are getting the most out of their money. It’s also important to make sure there are accessible funds for emergencies, rather than tying up all assets in a long-term vehicle like an annuity.