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March 02, 2015 at 11:48 AM
If you’re like me and scan the financial industry headlines, it seems that every day there’s a new take on how people in certain demographics are preparing for retirement. More often than not, these articles focus on the two largest generations: baby boomers and millennials.
What’s missing from the headlines is the opportunity to assist that seemingly overlooked generation in between, Generation X, with retirement preparedness. The oldest members of Generation X are approaching their mid-50s and, in theory, are heading into the last decade of their working years.
Known previously for coming of age in the “grunge” era, this group is more pessimistic than both millennials and baby boomers that they’ll have enough money for retirement.[1] However, fixed annuity purchases, which previously were thought of as an investment strategy for retirees, are gaining traction within this group of investors who are financially conservative and looking for a way to protect and grow assets.
Consider how you can use the following strategies to make new sales to this audience in the coming year:
- Find the right target. A Committee of Annuity Insurers survey, conducted by The Gallup Organization and Mathew Greenwald & Associates, found that nonqualified annuity owners are an average of 51 years old at the time of their first purchase.[2] Purchasers in this age group most likely are attracted to fixed annuities as they provide a conservative investment strategy and with strong guarantees.
- Understand their needs. Many workers preparing for, or nearing, retirement age are at a life stage in which risk tolerance is low. This is especially true for those in Generation X, as their portfolios may have taken a hit in the recent recession. A fixed annuity can be a practical investment for those who don’t want to gamble with money they’ve worked so hard to accumulate for retirement.
- Position annuities as part of a larger portfolio. When connecting with potential clients in this age group, make sure they understand why fixed annuities can be a perfect addition to any retirement portfolio. Emphasize that fixed annuities can provide predictable future income with a guaranteed rate of return. Flexible payout options offer a lifetime income stream, and those earnings aren’t taxed until the funds are used.
Understanding this new annuity purchaser, and the priorities for his or her retirement, will not only set you up for increased sales but also position you as a trusted advisor for years to come.
