With the state of U.S. retirement preparedness described as being in crisis levels and clients increasingly worried about outliving their assets, it’s not surprising annuities are garnering renewed attention.
As advisors know, there are more big reasons why annuities are “having a moment.” The thousands of baby boomers retiring every day coupled with concerns about outliving retirement savings has thrust annuities back into the spotlight. However, it’s not just boomers that are responsible for the annuities renaissance. Gen X, which is next up to hit retirement age, is worried they won’t be able to enjoy retirement comfort on par with their parents and thus are considering annuities.
After years of stagnation, annuity sales surged in 2022 and that trajectory continues today. Gen X is highly relevant in this conversation and just because they’re the next oldest generation after baby boomers. Gen X’s retirement concerns and struggles are well-documented, signaling some clients in this demographic are ready for annuities conversations.
Advisors need to know how to approach those chats and BlackRock’s recent Read on Retirement® survey provides some valuable insights on why clients, including Gen Xers, are increasingly interested in annuities.
Emphasize Lifetime Income
Advisors know that one of the long-running selling points of annuities is lifetime income. Simply because that playbook has been previously deployed doesn’t mean it’s out-of-date. In fact, it’s as relevant as ever, particularly with Gen X.
“American workers want to spend retirement feeling secure. Guaranteed lifetime income is a way to achieve that. 88% of the annuity owners we surveyed think every retiree’s portfolio should have at least some money invested in a product that guarantees lifetime income and 81% say it’s more important for today’s retirees than it was for previous generations,” observes BlackRock.
Annuities are also gaining popularity because more clients are realizing they could live longer than grandparents and parents, further highlighting the importance of lifetime income. With the income stream provided by annuities, clients get peace of mind, meaning they can reduce or eliminate financial stress – a selling point unto itself.
“97% of annuity owners say their annuities help them worry less about running out. But retirees have immediate financial responsibilities on their mind, too—and 93% say having an annuity helps them worry less about day-to-day expenses,” adds BlackRock.
Less Vulnerability, More Fun
If there are two things retirees and those close to that stage want, it’s to avoid feeling financially vulnerable while enjoying their post-work lives. Yes, the latter point is as simple as “having fun.” Someone that has worked 30 or 40 more years as earned that right.
Obviously, some good times require money, but many retirees are worried about spending too much. However, the BlackRock survey notes 61% of annuity owners aren’t worried about depleting their nest eggs.
“Annuities help ease those spending fears, say our survey participants. 53% say that owning one makes them feel more comfortable spending non-guaranteed assets if there’s something they want or need to spend money on, and 61% of annuity owners are very or extremely confident they can withdraw sustainably through retirement,” concludes the asset manager.
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