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Life Health > Annuities > Fixed Annuities

Can This Annuity Ease Social Security Claiming Pressure?

By Allison Bell

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Paul Tyler sees agents and advisors as navigators who help retirement savers steer past a complicated, irreversible obstacle: the Social Security claiming date.

Tyler is the chief marketing officer at Nassau Financial, a life and annuity issuer that recently released a product designed to fit with a client’s claiming strategy.

He says clients need all the help with claiming strategy that they can get.

“The Social Security claiming date is the most important and daunting decision people make in retirement,” Tyler said in a recent interview. “You make it once. You only get one time up at bat. We want to make sure it counts.”

Nassau Financial: Nassau Financial is a Hartford-based company that was formed through a series of investment firm-managed acquisitions that included the old Phoenix Mutual Life.

The products: Nassau Financial has been selling the Personal Income Annuity, which is designed to offer a client a chance to choose to collect income at one level during the first benefits period, and at a second level during a second benefits period, since 2011.

Advisors can help clients use the annuity to set income at one level before they begin collecting Social Security benefits and another level when Social Security benefits begin coming in.

Nassau recently added another product, the Nassau Income Accelerator contract. It’s similar to the older product but easier to use without special modifications and accompanied by new features, like a Social Security planning tool, a new product performance illustration tool and an artificial intelligence-based tool that answers financial professionals’ questions about the product.

The new product is a single-premium, non-variable indexed annuity. Clients can use it to make an initial high-income period last for up to eight years, to ease the claiming date decision.

Paul Tyler: Tyler has a bachelor’s degree from Princeton and a law degree from Cornell.

He started as a management consultant in the Boston area, then moved into life insurance as an executive at MetLife.

He then worked for F&G before signing on at Nassau Financial in 2016.

For one year, he was the chair of the LIMRA-LOMA Social and Digital Business Committee.

The thinking: Tyler said the two-income-level annuity strategy has been a great niche product and works well for many middle-income clients as well as more affluent clients.

“We found a lot of adoption of the Personal Income Annuity in the federal worker space,” he said.

At the U.S. Postal Service, for example, many workers can retire at 58, and, especially on the East Coast, they might be in couples with a total household income of about $200,000, he noted.

For many of those workers, he said, the dominant view of income and investment risk is, “I need income now; I’d like to give the risk to somebody else.”

The median premium paid is about $100,000, and the average is about $155,000.

The amount of premium paid tends to correlate with what a worker has saved in a 401(k) plan account, Tyler said.

The advice: Tyler said one challenge for Nassau has been persuading financial professionals to consider offering a new type of annuity.

When confronted with change, “agents pause, even when it’s something good,” Tyler said. “Agents are used to the concept of selecting one check forever. Now they have to explain two checks.”

He said the major challenge for financial professionals is explaining Social Security realities to the clients.

“People are sometimes surprised by how small the check is,” Tyler said.

He said clients are also shocked by how much of their Social Security checks they have to use to pay for Medicare and supplemental insurance products.

But “the longer you wait, the larger the check is,” and that helps sales of products designed to push the Social Security claiming date back, Tyler said.

Allison Bell

Think_Allison

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