By Rich Lane
When it comes time to discuss retirement planning with your clients, focus on the core thinking behind their goals: building financial security for the latter part of life. Given recent market uncertainty, your clients may be more inclined to take a conservative approach to their investing. Recommending financial vehicles that maintain a balanced portfolio can offset market concerns and set your clients up for a comfortable retirement.
One of the best ways to help a client build confidence in his or her financial plan is by recommending the client lock in a portion of his or her savings into a guaranteed lifetime income using a fixed annuity. A fixed annuity complements an existing investment portfolio while helping ensure your client generates income for his or her post-retirement years — regardless of how the market performs.
In addition, a fixed annuity can easily be positioned for your client, no matter what the retirement income situation may be, as it can be turned from an accumulation vehicle to an income stream if your clients determine they need supplemental income. As such, it’s important to talk with your clients about when they may plan to take income from the annuity so that you can best position the right type of fixed annuity.
Choosing the right annuity
A fixed annuity can be somewhat customized to meet the specific needs of the investor. When it comes to planning for your clients’ golden years, there’s a lot at stake. Will they have enough money to last the rest of their lives? Will they be able to survive a health scare?
Two types of fixed annuities, immediate and deferred, can be positioned for clients depending on their retirement planning goals. A deferred annuity is a great recommendation for a client who wants lifetime income, but wants to begin receiving it at a later date. While some clients will want to turn on an annuity for use right away at retirement (an immediate annuity), others may be able to live off other investments or income sources - including pensions, Social Security or a 401(k) - for some time. A deferred annuity provides your clients with the protection of a safety net: knowing they won’t outlive what they’ve worked so hard to build during their working years. Regardless of your clients’ goals, the guaranteed return of a fixed annuity is hard to beat.
Flipping the switch to access fixed annuity income
By positioning a deferred annuity, a client can flip the switch at a later date and start receiving income from their funds. In addition, the income stream from a fixed annuity is guaranteed for a client’s lifetime or a specific period of time. When choosing a lifetime income stream, your clients can be assured they never will outlive their money, even if they live to be 110 years old. What other type of investment provides that kind of financial security?
Flipping the switch from saving to spending may be unnerving for clients, so it’s important to talk it through with them. Given your understanding of your clients’ goals and larger investment portfolio, you can help them establish a plan to ensure they flip the switch on an annuity income stream at the right time. Help your clients understand that retirement planning is a puzzle and that a fixed annuity is a great piece to consider.
Rich Lane is the senior director of individual annuity sales and marketing for The Standard. Rich may be contacted at [email protected].
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