When many of us picture retirement, we envision laid-back days of enjoying hobbies, spending time with family and friends, and perhaps traveling to beautiful destinations. Unfortunately without proper planning, many people may not be able to achieve this vision. A common thread among those who are happiest in retirement is related to confidence in finances. Defined income goals, accumulating wealth, and having a guaranteed* retirement paycheck all help to boost satisfaction and create assurance in those golden years.

As more companies move away from providing pension plans, the responsibility of having enough income for retirement is shifting largely to the client. Many individuals are not prepared, as 46% of all American workers have less than $10,000 saved for retirement and 29% have less than $1,000 reserved.¹ Consumers have many options when trying to build a more stable financial future. In looking specifically at annuities, 9 out of 10 annuity owners had a positive outlook about the lifestyle they will enjoy during their retirement years.² The top reason clients purchased an annuity was to bridge the gap between money received from social security and pensions and money needed to meet living expenses in retirement. Other important reasons were to accumulate wealth for retirement and to have guaranteed* lifetime income.

Annuity Sales Continue to Climb

Of those who purchased traditional fixed annuities, 86% of them were satisfied with their annuity purchases.³ This high rate of satisfaction is likely due, at least in part, to greater transparency and ethics in the annuity business. Clients knew exactly what they were getting in regards to interest, fees, and guaranteed* income payments. Purchasers of all annuity types found the financial strength of the issuing insurance company to be a very important factor when purchasing such a product.

Along with these positive viewpoints by fixed annuity owners, the sales of fixed annuities continue to climb. U.S. annuity sales totaled $60.6 billion in the third quarter of 2015, improving four percent compared to the prior year, according to LIMRA Secure Retirement Institute’s third quarter U.S. Individual Annuities Sales Survey. Indexed annuities reached record-breaking levels with total sales at $14.3 billion, up 22 percent and ten percent higher than the previous best quarterly results.

Why are consumers choosing fixed indexed annuities to meet their retirement needs and help them reach their long-term goals?These statistics raise a couple simple questions. Why the continued growth in the fixed indexed annuity arena? Why are consumers choosing this solution to meet their retirement needs and help them reach their long-term goals? There is no universal answer, but it is most likely due to the many product features that provide useful benefits and offer protection against the various risks that can potentially deplete future savings. Also, some of this shift is due to not only greater education and awareness but also to clients having time to reflect on what might happen to their principal if there is another market downturn.

Fixed indexed annuities bring a great deal to the table, including guaranteed* lifetime income, the opportunity for tax-deferred growth, protection of premium from potential market downturns, as well as built-in flexibility; allowing access to remaining contract values in case needs change.

Counteracting Retirement Risks

Even if a person has been diligent about saving for the future, many times those assets can quickly be depleted by risks such as longevity, inflation, market uncertainty or unplanned medical expenses. It’s definitely not the happy retirement many would imagine for themselves. Thankfully, products like fixed indexed annuities can help to counteract these retirement risks and protect a person’s hard-earned savings from potential loss.

Adding a bit of certainty and guarantee to an unpredictable future can unarguably help create a pleased customer.When looking at longevity and the aging population, a male who reaches age 65 is expected to live an additional 19.3 years and a woman of the same age will live another 21.6 years. Overall, 25% of 6-year-olds are expected to live into their 90’s.⁴ Since people are living longer, they will need to plan for an extended period of time without an income. This could put more strain on savings as they try to make these dollars last as long as possible. A fixed indexed annuity addresses the longevity risk directly by offering a guaranteed* retirement paycheck no matter how long a person lives. When clients add an optional rider, they will know from day one exactly the amount they will receive every year, for the rest of their lives. Adding a bit of certainty and guarantee to an unpredictable future can unarguably help create a pleased customer.

Inflation is also a very real risk in today’s financial landscape. Many of us have probably realized that things just don’t cost what they use to. From everyday products, to cars, houses and medical care, price tags have risen across the board. Inflation can be a risk to retirement savings as well, and the longer a person is in retirement, the greater the impact of inflation. As a result, there has also been a decline in the purchasing power of a dollar. For example, every dollar your client had in 1985, they would need $2.17 today to purchase the same goods and services.⁵ The key factor behind a loss of purchasing power is earning less on savings than the rate of inflation. Products like fixed indexed annuities can offset inflation and protect purchasing power by offering that guaranteed* retirement paycheck.

Having a retirement strategy in place and supplementing that plan with a fixed indexed annuity can provide a little serenity in a sometimes stressful, unstable environment.Over the past 14 years, we have seen the S&P 500® Index cut in half twice. However, despite these drops, over this same time period the S&P 500® Index grew by 21%.⁶ For consumers worried about market volatility, fixed indexed annuities offer a guaranteed* minimum return, along with the potential to earn additional tax-deferred interest when the market increases. Plus, when the market experiences negative downturns, the client’s principal is protected and no money will be lost. Having a retirement strategy in place and supplementing that plan with a fixed indexed annuity can provide a little serenity in a sometimes stressful, unstable environment.

Providing Income for Long-Term Care

Just like the unpredictability of the market, one cannot forecast the future or know what unforeseen events or illnesses may occur. Long-term care is a growing cost in this country and the cost of care from an extended illness can quickly diminish a person’s assets. Several fixed indexed annuities in the marketplace today have optional riders that enhance an income payment in the instance the annuitant requires long-term care. These riders often double or triple the normal income payment for a certain period of time, providing a great value to the annuitant when they need it most. While thinking of a potential illness definitely does not add to a person’s level of happiness, knowing they are covered in the instance it does happen can at least help boost one’s confidence and peace of mind.

Continuing the Pursuit of Happiness

Retirement ought to be a joyful time and encouraging clients to put a plan in place can help to make that a reality.

Clients who are able to maintain their standard of living into retirement, have assets in case they need them, and have the potential to accumulate wealth during favorable market years will most likely be satisfied with their purchase. With a variety of features and valuable benefits, financial professionals can feel confident when recommending fixed indexed annuities. Of course, they aren’t suited for everyone, but they can be a good fit for those who:

• Seek to complement other income sources, such as Social Security
• Do not have any type of guaranteed* lifetime income or defined benefit pension plan in place
• Are risk-averse and are looking to protect premium, while at the same time seeking market indexed growth
• Are looking for a way to convert sums of cash from retirement plans into immediate income
• Want a flexible plan that can adapt to changing needs

To maintain a happy annuity client base and increase the number of satisfied customers, it’s important to inform each individual about all aspects of the product before he or she makes the purchase. Educating both agents and consumers about fixed indexed annuities continues to be an ongoing and necessary opportunity. There are several competing products in the marketplace today and many consumers aren’t aware of their options, as 54% of Americans are searching for advice on how to make their retirement savings last.⁷Helping clients make informed decisions about their future now will leave them time to actually enjoy those hard-earned days when retirement arrives.

Lindsay Meleshko is a Marketing Communications Consultant with Insurance Insight Group LLC, a marketing and strategic consulting firm. Prior to joining IIG, she authored comprehensive training programs, endorsed a national brand-building tour, devised marketing campaigns and created agent and consumer advertising for Aviva USA. She now supports clients by developing valuable training and compelling marketing strategies that convey the client’s message and have a powerful impact on their target market. She is versed in compliance, life and annuity training and innovative recruiting and strives to stay on the forefront of industry trends and sales opportunities.