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It’s a Great Time to Talk About Income Annuities

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What You Need to Know

  • Only 18% of financial professionals are interested in annuities that offer a guaranteed lifetime income.
  • About 85% of consumers surveyed said they want that.
  • One thing to mention is features that can help an annuity holder address inflation.

April is Financial Literacy Month, an excellent time to celebrate financial professionals and all the great things that they do for their clients. For financial professionals, this Financial Literacy Month might also be a particularly good time to check in with clients on whether income-producing annuities should play a role in their retirement income plans.

Just this past December, the Alliance for Lifetime Income, in partnership with CANNEX, released the second installment of the Protected Retirement Income and Planning Study. Among the study’s key findings: Investors who were asked to build their own hypothetical $1 million retirement portfolio said that annuities and other income-producing assets were the most favored.

According to the study, investors allocated 13% of their hypothetical portfolio to annuities. Rounding out the top five asset category choices were dividend-paying stocks (approximately 20%), real estate (14%), bank CDs (11%) and bonds (10%).

The study also found, among other things, that 85% of investors are either interested in owning an annuity that guarantees lifetime income or already own one.

However, the corollary study of financial professionals showed that only 18% believe that their clients are extremely interested in annuities with lifetime income, the Alliance and CANNEX noted in releasing the study’s findings.

These findings indicate enormous opportunity to open up the conversations with clients about protected income and the role that annuities can play.

Indeed, multiple factors are likely helping to drive investor curiosity about income-producing products these days.

For instance, in this current period of higher inflation, retirees may be concerned about having an income stream that will last them throughout retirement.

Additionally, the Setting Every Community for Retirement (Secure) Act, which Congress passed in 2019, eliminated some of the barriers for plan sponsors to include lifetime income products in 401(k) and other employer-sponsored retirement plans.

Since its passage, the act has continued to receive media coverage, which likely has increased overall awareness of annuities in general but of protected lifetime income products in particular.

Unfortunately, the COVID-19 pandemic has also created financial challenges for many households, which may be resulting in greater interest in ways that they can obtain additional financial security.

Yet another factor that’s likely creating more interest in products that can provide guaranteed lifetime income is longer life spans. By 2060, total life expectancy in the United States is projected to reach an all-time high of 85.6 years, according to a report issued by the U.S. Census Bureau in February 2020.

When talking to their clients about annuities, financial professionals can point out that:

  • Adding a source of lifetime income to a portfolio, like an annuity, can provide a consistent stream of income payments that a person can’t outlive. It can also provide benefits like protection from market volatility and a death benefit for beneficiaries should your client pass away.
  • Each of the basic types of annuities — fixed, fixed index, variable and deferred — can offer lifetime income and a level of protection that may benefit your clients’ retirement income strategies.
  • Certain annuities can help offset inflation by offering growth opportunities through the accumulation period.
  • Investors can use annuities as a way to supplement other sources of retirement income, such as Social Security or their savings.
  • An annuity is one of the only financial products that can offer income for life. Income from an annuity can be used to help cover everyday expenses.
  • An annuity can be a great complement to a strong financial plan that already includes liquidity. Portions of an annuity’s account value can be withdrawn and used as an ongoing source of income. But if you need full access to your money, an annuity may not be the right choice.

For our industry, it’s always exciting to come across findings that indicate strong investor interest in annuities that provide lifetime income.

Knowing that investors may want to talk about annuities now more than ever makes this Financial Literacy Month worth celebrating even more.


Myles Lamber (Photo: Brighthouse)Myles J. Lambert is executive vice president and chief distribution and marketing officer at Brighthouse Financial.

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