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4 Options When Selling Annuities - Sandquist Sept.

Saving for retirement can be difficult, that’s just reality.

Fortunately, there are several different ways that Americans can save for retirement. It’s important to sell annuities because, while most people are aware of the benefits of employer-sponsored 401(k)s or individual retirement accounts (IRA),  depending entirely on traditional vehicles may leave your clients’ retirement plans open to risk. .

If a stock market downturn occurs close to a client’s target retirement age? Much of their IRA or 401(k) savings may sink 


Scott Gilpin

Retirement Marketing Manager

alongside the greater market. Portfolio diversification should be a priority for retirement savers, and agents, such as yourself, have a role to play in educating clients about all potential investment vehicles. That’s where annuities come into play. Annuities can provide fixed income, help protect income, and better mitigate risk. Let’s explore in detail. 

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"In all, 51% of retirement savers were behind schedule, and only 14% said they were “very” knowledgeable about retirement saving strategies. "

To understand the value that annuities can bring to a retirement portfolio, it’s worth looking at the challenges faced by Americans today.  According to a 2019 John Hancock survey, saving for retirement was the top money woe for respondents.  In all, 51% of retirement savers were behind schedule, and only 14% said they were “very” knowledgeable about retirement saving strategies. Most understand the tall task ahead of them: 

71% of respondents said they would need to replace at least 50% of their income in retirement. Of that number, 39% said they will need to replace more than 75% of their current income.  Few have that level of savings guilt up.  The most current research from the Economic Policy Institute shows that for a family with a head of house age 44-49, median retirement account savings totaled only $13,000.  According to research cited by CNBC in 2019, the annual cost of living in retirement exceeds $50,000 in all 50 states.

What is an Annuity? Basically, an annuity is a long-term contract with an insurance provider. Payments toward this agreement are converted into retirement income that is then distributed once the annuitization period begins. Investors may either make one lump sum payment or multiple smaller payments, depending on the annuity type. Similarly, there are a number of different ways in which clients can structure the exact cadence of how they receive money throughout the annuitization period, which can begin immediately upon signing the contract or at a later date.

4 Options To Consider When Selling Annuities

  • Fixed Annuity: Provides a fixed interest rate and a high level of predictability. Payment choices are flexible, and can typically be accessed at different times.
  • Index Annuity: Think life insurance policy, but in reverse. The investor commits a lump-sum payment upfront that is then disbursed in regular installments that can begin in as soon as one month.
  • Deferred Annuity: Payments from such annuities are held until a future date. This is great for pre-retirees who don’t need money now but desire greater lifetime income once they leave the workforce.
  • IRA Annuity: Stocks and bonds aren’t the only assets that can be invested in through an IRA. Clients can also purchase annuities through their accounts, allowing for tax-deferred growth. However, there are many pros and cons to consider with IRA annuities. For example, annuity money already grows tax-deferred, holding it in an IRA might be redundant. On the other hand, if you’re closer to retirement, such an investment could give you access to a guaranteed income.

You may already know all this information, maybe it’s new to you. Either way, we at Producers XL can provide the experience and resources to educate your clients on the benefits of securing their retirement income. Consider it income to supplement Social Security!