As 2021 dawn upon us, many of our clients are likely aspiring to do a better job managing their money and providing for their retirement.

Henceforth, I am going to share three new reasons why annuities could have a place in our client's portfolio. Annuities are gaining a lot of traction in the market especially given what Covid-19 has done and the uncertainties it brought to the economy. Here’s why we should find the opportunity to talk about annuities in 2021.

Annuities could be a viable alternative against the need for long-term care (LTC).

As we are probably aware, most clients don’t want to talk about long-term care. But the onus is on us to protect their nest egg against possible long-term care costs. Thankfully, annuities with LTC feature embedded resonates well in this situation.

For a start, annuities with LTC riders mitigates the problem of clients who are uninsurable for traditional LTC policies. A well-structured annuity shields them against potentially hefty LTC costs, and protects their assets from forced liquidation particularly during a declining market simply to provide for LTC costs.

So how do we turn this concept into a reality? Have a look at our client’s existing portfolio. Firstly, think about which ones are best left as wealth accumulation tools. Subsequently, identify a couple of assets that can be utilized to purchase an annuity with a LTC rider. The rider protects our client’s portfolio from liquidation in the event of unexpected disability, whereas the annuity itself will continue to provide for their retirement income.

Annuities make it more possible to retire in a declining economy.

Annuities serve to insure our client’s income stream against the effects of a declining economy. With an annuity providing guaranteed income, our client doesn't have to monetize the principal hastily during unfavorable market conditions. For instance, let’s say our client takes an underperforming asset and purchase a life annuity with a guaranteed lifetime pay-out benefit. As long as there is no premature surrender before the breakeven point, our client gets guaranteed income without the need to monetize their primary asset.

Annuities provide clients more certainty during retirement.

Ask our clients this question: Would having a guaranteed income make them feel more assured during retirement?

Generally, retirees with guaranteed income from an annuity are expected to feel more confident about their retirement. Where did that confidence come from? It is derived from having a similar income level with a reduced risk of outliving their assets. An equities-only portfolio, by comparison, emanates a greater risk of loss and less confidence as a consequence.