WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today released a new report detailing how ongoing product innovation will help support continued demand for lifetime income in the years ahead.
In its annual State of the Insured Retirement Industry report, IRI notes that ongoing product development is creating a wide array of consumer choice regarding lifetime income products, allowing advisors to create retirement plans that better meet the needs of their clients. These product development efforts include new launches of Investment-Oriented Variable Annuities (IOVAs), new product designs of Fixed Indexed Annuities (FIAs), and the introduction of new Deferred Income Annuities (DIAs) that meet Qualifying Longevity Annuity Contract (QLAC) criteria.
“The demographic case for lifetime income has never been more pronounced,” IRI President and CEO Cathy Weatherford said.
“There’s a large cohort on the cusp of retirement. These Americans will live longer in retirement than any generation before, and will be more responsible for their financial security. This is a tremendous opportunity for the retirement income industry, and we are seeing market participants expand and fill out their product shelves to meet this growing need.”
The report also found that annuity providers are well-positioned headed into 2016, with strong liquidity and balance sheet fundamentals. In addition to healthy financials, the expectation that interest rates may soon begin to rise should ease macroeconomic headwinds bearing on the lifetime income market. IRI said if interest rates reach or exceed 3 percent, income-oriented annuity sales will likely increase significantly.
From a public policy perspective, IRI cautioned that the Department of Labor’s forthcoming final fiduciary rule is a wildcard that “all eyes across the industry will be watching,” as the final form of the rule will determine the level of disruption to the lifetime income industry and the consumers it serves.
Key findings from the report:
· Demographics remain favorable, contributing to high demand for lifetime income products. According to U.S. Census data, there are more than 74 million Americans aged 55 and older.
· Only 27 percent of Baby Boomers are confident their savings will last throughout retirement, creating a large pool of consumers who can benefit from lifetime income strategies.