Women, Annuities and the Need to Outsource Retirement Income Management

According to recent research from Cerulli Associates, financial advisors are reporting that annuities are requested more than any other unsolicited product.  Of the advisors surveyed, 60.8% of advisors had clients who requested annuities, just above Roth IRAs, which 58.8% of advisors were asked about.   The question is why?  The answer is simple, Annuities provide guarantees.

So here are some factors to think about with an annuity:

1)       Annuity money is predictable if you need lifetime income. It is safe and guaranteed, plus an annuity can provide income that can never be outlived.

2)       Women benefit more than men.  It’s a better deal than anything else either spouse could buy.  Single females need to think very hard before keeping 100% of their money in categories like stocks and bonds, 401k’s, etc.

3)       You can’t lose it all.  The responsibility for managing your retirement account is fully outsourced to a risk manager, the insurance company. You don’t have to be an investment genius or super disciplined with the annuity option.  No matter how you go about it, managing money to provide income for 20 years or more requires expertise, commitment, and risk taking.

4)       No fees!  To maintain investments, you have to expect portfolio managers to come calling eager to manage your money.  Their interest in your future is propelled by fees and charges.

5)       Annuities deliver a level of efficiency that can’t be duplicated by mutual funds, certificates of deposits, or any number of homegrown solutions.  The challenges facing Social Security and the decline of corporate pensions add up to a “perfect storm” for retirees who might outlive their nest egg.

Let’s face it, if all the market did was go up, the need for annuities would not exist.  The reality is the market goes down, sometimes drastically.  The 90’s exposed millions to the rewards of investing.  The last four years showed the frightening side of the market.  The fixed/indexed annuity plays well to people because of its combination of protection and potential.

It’s a pleasure to keep you informed.