Research reports, such as those provided by LIMRA and others, have shown for years that women have a longer life expectancy than men, resulting in married women having a greater chance of outliving their spouses. If you've been in a social setting with a group of married friends, you've probably heard one or two jokes about it. Perhaps you've even joined in with a joke of your own. But did you also hear the bells going off in your head? You should have. Consider what this really means:
- Women will need retirement income for a longer amount of time.
- Women may not have someone in their home to care for them if the need arises.
- Older women may experience more economic disadvantage. Historically, women have earned less money than men, and generally for a shorter period of their life, so they tend to have less in their employer-sponsored retirement accounts.
- By living longer, women will be more heavily affected by inflation and the purchasing power of their savings, and will have increasing concerns over rising health care costs.
How many women do you know in today's world who are single or finding themselves newly single? How many married couples do you know? Either way, women represent a market that needs someone to help them plan for their retirement future.
There are several life events during which women should further consider their long-term retirement security:
- Retirement (either theirs or their spouse's)
- A spouse's death
- Divorce
- When they receive an inheritance or some sort of settlement
- If they have a tax issue that needs to be taken into consideration
These events can provide an opportunity for you to discuss guaranteed income, life insurance needs, and long term care during a time that a funding source is available.
The SPIA solution
Single premium immediate annuities (SPIAs) appear to be a good fit for women. Again, according to LIMRA, women purchase the majority of immediate annuities (53 percent). By their design, SPIAs can address many concerns that women may have. They are a guaranteed product, and can provide an income for life.
Many SPIA products on the market today offer liquidity and access to premium, along with optional benefits for nursing home confinement and inflation protection. SPIAs can also reduce taxable income for retired women. Income payments received from a non-qualified SPIA are subject to an "exclusion ratio" that could help retired clients reduce their taxable income; only the portion (or percentage) of the SPIA payment that represents earned interest is subject to taxes.
By virtue of a longer life expectancy, women should have real concerns over how they will be cared for if their health were to fail and they required assisted or nursing home care. A SPIA can also provide a guaranteed source of dollars to pay for LTCI premiums if the need for additional income is not pressing, or at the time that required minimum distributions (RMDs) come into play. The argument of "I don't need LTCI; if something happens to me, my spouse will take care of me" doesn't ring as true for women. This is further complicated by the possibility that an ailing spouse may very well have already depleted funds that were earmarked for care for both husband and wife.
Planning for your financial future
Do you remember – or have you ever seen reruns of – the old TV show "Leave it to Beaver"? Remember June Cleaver, the "Beav's" mom? It's amazing to think that, not so long ago, the traditional female stereotype had some truth to it. I'm not so sure that June would have given some of these issues much thought. I can tell you that a woman's perspective is much different today.
Women are concerned about their financial future. They understand that "Ward" might not always be there – or perhaps there never was a Ward. They are looking for the person who understands that they want to make their own decisions about their future and will spend the money to make sure that their retirement future is protected.
Oh and by the way: If we women have a positive experience, we are the best at telling all of our friends.
Laura Hahn is managing director – Annuity Center for The Marketing Alliance (TMA). Headquartered in St. Louis, Mo., TMA is one of the largest organizations providing support to independent insurance brokerage agencies, with a goal of providing members value-added services on a more efficient basis than they can achieve individually. Ms. Hahn can be contacted at 314.275.8713 or lhahn@themarketingalliance.com.
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