"A License to Spend"Empowering Clients to Confidently Spend in Retirement
3 Key Points:
1. Retirees' #1 fear is outliving their savings
2. Inflation has significantly diminished purchasing power of conservative portfolios
3. Lifetime income annuities empower retirees with "a license to spend"
The Retirement Income Institute's research found people with similar wealth spend 2x more in retirement if they own lifetime income annuities. Click HERE to read RII's full whitepaper.
Inflation Risk - The past few years have shown how quickly purchasing power decreases for a conservative portfolio that is 100% invested. Adding a lifetime income annuity significantly decreases inflation risk by allowing advisors to invest the remaining assets more aggressively while maintaining the same net risk of a client's overall portfolio.
Longevity Risk - It's no secret retirees' #1 fear is running out of money. A lifetime income annuity provides them with income they can't outlive, and RII's research highlights the psychological benefits that empower them to spend more.
Spotlight Client Solution*
8.28% Immediate Income at Age 65
A 65 year old can deposit $100k with Talcott and start receiving $8,280/yr of income for life.
To put that into perspective, the same client would have to earn an average net return of 7.57% in investments to generate $8,280 of income from $100k and have the money last until they're 90 years old. If they live to age 95, that number jumps to 8.17%.
Notable Client Solutions*
12% S&P Annual Cap (Fee-Based)
MassMutual Ascend's Index Protector 5 tops the charts for fee-based growth.
• 12% S&P Annual Cap
• No Surrender Charges (5yr MVA)
This product becomes even more attractive if rates come down since it has a Market Value Adjustment (MVA) for 5 years. A declining interest rate environment would positively affect the client’s balance since the MVA works like a bond.
5 Year FIA with 9.50% Cash Bonus
Ibexis's FIA Plus 5 is the go-to for replacing accumulation FIAs that were sold when rates were low.
• 9.50% bonus to offset surrender
• 5.75% S&P cap with 3% bailout
The 9.50% cash bonus offsets surrender charges, we've seen many replacements where Ibexis's bailout cap is higher than the existing annuity's cap, and the 5 year surrender schedule doesn't extend the surrender charge when replacing 10 year FIAs sold 4-6 years ago.
*Rates may be subject to premium banding. Products may not be available in all states. Replacement must be suitable and meet all requirements.
At Foundational Income, we strive to bring relevant topics and solutions to your fingertips in a straightforward way. We don’t see the need to keep products nor carriers a mystery. If you’d like to discuss any of this in more detail, give us a call!