We’ve all heard the amazing statistics about Baby Boomers moving into retirement years and getting ready to pass down trillions of dollars. What we haven’t heard much about are those who have money, but just not enough to have a comfortable retirement. We can’t help them save more but we can give them options to get a steady, predictable income for the rest of their lives.
This year the youngest Baby Boomers will be passing their 50th birthday and officially eligible for membership in AARP. Finally, by the end of the year we can say that all Baby Boomers have officially become senior citizens. Yabba Dabba Doo!
That’s good news for those of us in the race to help Boomers, who will:
- Pass down to heirs more than $12 trillion over the next 30-40 years.
- Retire at the rate of 10,000 every day.
- Reach the age of 65 every eight seconds for the next 15 years.
76% of working Baby Boomers have saved less than $100,000. 70% said they believe they are “doing a good job of preparing for retirement.”
– Employee Benefit survey of Workers
Now, for a reality check. Boomers are generally a confident bunch. The next time a Baby Boomer tells you “I’ve got everything taken care of,” consider these facts:
- 76% of working Baby Boomers older than 55 have less than $100,000 in retirement savings.
- 57% of those have saved less than $25,000.
- 46% of those have saved less than $10,000.
It gets better. In the same survey, 70% said they believe they are “doing a good job of preparing for retirement.”
Earth to seniors.
Earth to agents!! Are you paying attention? Not only is this a gigantic generational movement in sheer numbers, it’s also a tsunami of ill-prepared people sailing into their golden years in what appears to surely be choppy waters. Clearly, the opportunity to reach those who have saved enough is the big kahuna. However, the opportunity to help the 76% of the working population that is in peril is also huge.
With minor exception, there is one thing Boomers are most scared of: running out of the money before they die. If you’re a loyal reader of our Friday blog you know we are fixated on fixed annuities. Whether your clients have saved enough or not, we know they are all looking for lifetime income. Our friends at Mac Marketing have some solid advice for agents when talking clients through the decision regarding fixed annuities:
- How long is the surrender period? Annuity contracts can range typically from one to 15 years and almost all impose a surrender charge. Typically, the longer the surrender period the better the return. Surrender charges typically decrease over time. The reason for the surrender period is the protection the client receives.
- Does the annuity include a first year bonus? Some annuity companies offer premium “bonuses” on the first year deposit into an annuity. Some carriers offer multi-year bonuses. Some bonuses can go as high as 20%. So, for the client investing $100,000 in a bonus annuity with a 5% bonus, the accumulation value day one would be $105,000.
- What is the financial rating of the insurance company? If we check up on the company that’s going to put on a new roof then why wouldn’t we check up on the company that’s going to hold our money? Remember, after 2008 many credit ratings for insurance companies were lowered.
- Are there penalty free withdrawals? Most annuity products allow the client to take out a portion of the value of the account without penalty within the surrender period. Typically, 10% is available each year. The free withdrawals are not impacted by the surrender charge.
- What is the interest rate and how long is the guaranteed period? It’s critical the client understand how interest rates are calculated for different types of annuity products. For example, fixed annuities will have set interest rates but the guaranteed period may be different by carrier. Fixed Indexed Annuities calculate interest based on the performance of an index such as the S&P 500, which means the rate of return will be different each year. The rates are reset annually.
While fixed annuities can’t cure the common cold, they can be an important tool to help clients balance their financial plan and guarantee they will have a steady stream of income for the rest of their lives.
Want more information: call Drew (contact information at the end)
Product of the week: United Home Life – The Provider
United Home Life has a full line of whole life and term products that can be offered on a simplified issue basis. Agents can write life insurance for healthy individuals as well as those with high risk pre-existing conditions. UHL’s plans are affordable and make problem solving for the agent an easier task. Aside from its competitive base plans, UHL has a strong line of riders as well. Across the board United Home Life is a leader in the life insurance industry and is a must-have carrier for agents. Call for more exciting information!!!
Call 866-547-8780 and talk to Drew Gurley, ext. 102.
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