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.