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June Is National Annuity Awareness Month

Message From the CEO

Graduates of NAIFA’s Leadership in Life Institute have a deep appreciation for The 7 Habits of Highly Effective People by renowned leadership authority Stephen Covey. They may be familiar with Covey’s quote, “If there’s one thing that’s certain in business, it’s uncertainty.” The same principle applies to life.

Transitions often amplify uncertainty, and among the most uncertain times for many is the transition into retirement. It has been widely reported that 2024 is the year of “peak 65” in the United States, as an average of 11,000 people reach the traditional retirement age of 65 each day. With more than half of peak 65ers owning investable assets of less than $100,000, according to the 2024 Protected Retirement Income and Planning (PRIP) by the Alliance for Lifetime Income (ALI), the unlikelihood of enjoying lasting financial wellbeing is a real concern for many. The 2024 Insurance Barometer Study by LIMRA and Life Happens, NAIFA’s consumer-education arm, confirms this conclusion, revealing that “having enough money for a comfortable retirement” is U.S. consumers’ leading financial concern, ranking even above worries about paying monthly bills and reducing debt.

Helping clients have greater certainty is among the most valuable services insurance and financial professionals provide. Annuity products are important tools that can guarantee consumers a constant and consistent income stream in retirement. NAIFA supports National Annuity Awareness Month, an initiative led each June by the National Association for Fixed Annuities and the Coalition for Annuity Awareness (of which NAIFA is a member), to spotlight annuities and educate the public about the only financial products that guarantee lifetime income.

Social Security, by design, covers only 40% of the average retiree’s pre-retirement income. Mounting fiscal concerns could lead Congress to revise the program in ways that reduce benefits for retirees. Social Security’s murky outlook is another layer of uncertainty for retirees and those approaching retirement.

The ALI study found that almost half of Americans aged 61-65 have already opted to begin receiving Social Security benefits. Uncertainty plays a large part in their decisions. Three in ten say they are taking the benefits because of a “fear of missing out,” citing concerns they will die or the program will become insolvent before they are eligible for their full benefits. Another 43% have disabilities or are otherwise unable to work, and 40% say simply that they need the income.

Annuity contracts, in contrast, are guaranteed. They provide consistent returns that are not subject to volatility in the financial markets or the prevailing sentiments of lawmakers. Annuity income can ensure that retirees and those unable to work can cover fundamental expenses, like housing, healthcare, and general living costs. Annuities may offer tax advantages. They can be structured to meet consumers’ individual financial goals and may include investment options that take into consideration their owners’ personal risk tolerances.

But people need a better understanding of what they are and what they offer.

A previous ALI study found that only 17% of consumers say they are extremely familiar with annuities. Around 61% said they are extremely interested in owning a “financial product that guarantees a certain amount of regular income for the rest of their life.” Yet when asked if they were interested in “an annuity” (essentially the same question), the percentage of those extremely interested declined to 50%.

Making the public more aware of annuities and the certainty these contracts bring is an important goal of National Annuity Awareness month. The occasion provides a great opening for insurance and financial professionals to initiate conversations about annuities with existing clients and other consumers. These conversations are vital to ensuring consumers know their options as they prepare for retirement.

Educating the public on annuities is a win-win for financial professionals and consumers. While consumers gain greater peace of mind and the tangible benefit of guaranteed income, the earlier ALI study found that clients who have annuities are more satisfied with their financial professionals than those who do not.

Join NAIFA in supporting National Annuity Awareness Month by spreading the word about this vital financial product that guarantees a measure of certainty in uncertain times.

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