By Bill Broich
When was the last time you heard anyone say, “I am not worried about the stock market.” The financial crisis beginning in 2008 still hovers over all of us today. Equities’ sharp drop during the crisis, and their up-and-down ride recently, have encouraged investors to be more cautious with their money. Baby boomers especially have re-evaluated their approach simply on the basis of time, there isn’t enough time to remake the money.
No one is demanding more security for their retirement money than are Baby Boomers. They seek financial security and family well-being above high-risk investment returns. In other words, safety and security.
About 10,000 baby boomers retire every day, and that is going to continue for about 15 more years. What is being learned is the percentage of baby boomers who feel financially prepared for retirement has dropped since the financial crisis. In 2011 nearly 40% of Baby Boomers thought that they had enough money to retire comfortably. Today that number has dropped to roughly 25%.
The gorilla in the room is also waiting for the Baby Boomers, healthcare. Many boomers have to retire earlier than planned as the result of health problems or layoffs. Such forced retirements put additional pressure on a retirement options.
The choices are very stressful, bank accounts, equities or bonds, those options do not offer much hope. Adding to that a feeling of financial insecurity, focuses many baby boomers to look for a reliable source of retirement income.
With safety and security at the forefront, many Baby Boomers have begun to exploring ways to fund retirement and many have discovered annuities. Annuities offer a dependable income stream that offers financial advisors a good option to help their clients prepare for retirement income needs.
Annuities on the surface seem complicated but in reality they are quite simple products. Some allow for income today and some allow for income at a future date selected by the annuity purchaser. Both offer the advantage of deferring taxes until the money is paid out, as well as options for an enhanced death benefit to beneficiaries. The correct choice is dependent on the individual, both goals and needs.
As an example, people who are on the verge of retirement may benefit most from immediate annuities, which enable them to turn their savings into a regular stream of income. A deferred annuity may make more sense for clients who are years from retirement or are primarily concerned about outliving their savings. This type of retirement investment would have clear appeal to a conservative investor.
Annuities can help build secure retirement income strategies for Baby Boomers. The memory of the past crisis is helping alleviating the stress from anxieties of those with memories of the financial crisis and following volatile market.
Annuities can offer a variety of benefits to meet the needs of the Baby Boomer generation.