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January 29, 2014 at 11:53 AM
There are approximately 80 million baby boomers, born between 1946 and 1964, who are rapidly approaching retirement. This demographic makes up a significant portion of the annuity-buying community. In fact, around half of annuity owners purchase their annuity between the ages of 50 and 64.
As baby boomers distance themselves from the Great Recession, many are seeking to make prudent investment decisions — leaning toward conservative savings opportunities that will outlast American’s next economic challenge.
Insurance agents marketing to baby boomers may increase their sales by highlighting advantages of annuities, such as longevity, security and portfolio diversity.
Longevity
Annuities allow investors to create an income stream they will not outlive. The Social Security Administration reports that people are living longer. A 65-year-old woman may live to 86, and a 65-year-old man until 84. It is estimated that 33 percent of seniors will live past 90. This means that there will be many years of retirement expenses.
As pensions are decreasing in popularity and Social Security payments are often unable to cover all living expenses, an annuity can be purchased with a guarantee that investors will have regular payments after they leave their job. The annuity can be structured for either a period of time or for a lifetime.
Another trend for baby boomers is working later into the retirement years. Certain deferred annuities offer flexibility, which is helpful for those who want to slowly transition to work, then annuitize payments when they are ready. Just make sure that investors are aware of the stipulations for surrender periods and high penalties for early withdrawal.
