Jenna's Top Picks

Many retirees feel like they are facing a growing list of risks and left trying to answer the question of how they will replace their income during their non-working years. This week, we will explore why annuities continue to expand and how different demographics are using fixed income.

First, here's Tim Seifert , Senior Vice President, Head of Retirement Solutions Distribution at Lincoln Financial Distributors , on records being set in the RILA market:

“The RILA marketplace is an expanding market place. It is growing. We just had four consecutive quarters of growth. And in this year, 2024 the first quarter, we set another record of $14.5 billion according to LIMRA. And LIMRA is forecasting this to exceed $50 billion in 2024, so according to our research here at Lincoln we expect that demand to continue. We expect growth to continue because after all it meets the consumers’ concerns around inflation, around growth, around protection, and having enough income in retirement. The value propositions of RILA is really really strong today and will be strong going forward.”

Asset TV also recently spoke with Maurice Brinson , Learning and Performance Consultant at MassMutual Strategic Distributors , on our Annuities Masterclass. He outlines some of the key retirement concerns to try to solve for.

“So we believe there are four main risks that should come up in every conversation about a retirement planning. You have your sequence of return risks, your longevity risks, long-term care, as well as inflation. In terms of sequence of returns, it is as important when you start retirement, just as important as the amount of income that you're going to take as well when that starts. A client that sees a negative market return earlier on in their retirement journeys, they can see a drastic decrease in their retirement savings, where a person who sees that same negative return later on, they might not see that negative drastic reduction of that retirement savings.

So from there, we then go into longevity risk. People are living longer. We all know that. With the increases in different types of medical technologies, in terms of holistic medicine as well, people have more information and education on how to better live longer and have more fulfilling lives. So with that, we have to have a succinct and sustainable plan to make sure a person doesn't outlive their income.

Going from there, we also have long-term care risks. Now in terms of long-term care, people don't really understand the cost that can be in play in retirement, and a long-term care event actually takes place. If we're looking at nursing homes, it can take from around $7,500 or up to $10,000 to be placed in an adequate nursing home facility. But alongside that, people might also have in-home care, they might have a chronicle illness that takes place. You have to have something in place to make sure that you can live comfortably in those retirement years.

And then lastly, I'll end off in terms of inflation in terms of a conversation that an advisor must have with their client. Inflation is ever rising. We've seen stark increases in inflation over the last couple of years. The cost of things as it stands today will not cost the same thing tomorrow. So we have to have those plans in place to cover that moving forward.”

Finally, Annexus Group EVP Product and Business Development Eric Denham delves into the idea of “Retirement Refinance” and why it could be a good time for people to rethink their planning for retirement.

“Yeah, 20-year high on interest rates. I mean, if you were locking in a mortgage, you would want to look at the lowest point in the market. I've got a 2.5% rate on my mortgage. I'm happy as I could be right now. You want to lock in a low point in a mortgage. With annuity products, because they're long-dated the way insurance companies invest these into a matched duration to a long-dated instrument, you want it. Today is the place to lock in high rates. Interest rates are at their highest point in the last 20 years. Other factors that come in. There's about $3 trillion in the annuity market. We've hit a real escalation of annuity sales in the fixed-index market in the last 12 years. And you combine fixed-index annuities, people who bought variable annuities back in the day, and all these MIGA products, these fixed-rate products that are many times the first annuities people have owned. You're approaching $2 trillion that's out of surrender and that is in need of advisors to really look and figure out what's the right thing to meet the client's needs. And the thing that's been underlying this record growth all along has just been the demographic shift of the baby boomers turning 65. We don't even reach peak 65 until this year. So 2024 is the year that more people will be turning 65 than any year beforehand. So all these factors have come together to create for advisors, I think just one of the biggest opportunities we've seen in a long time.”?