The Trifecta of Retirement Planning | ThinkAdvisor

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What would you like to know

  • Annuities can offer guaranteed income.
  • COVID-19 has increased uncertainty.
  • The author says that advisers who can help clients with annuities have a way to deal with this new uncertainty.

For many clients, planning for retirement means facing the unknown – from how long they will live to how long their savings will last. COVID-19 has created even more uncertainty, as one in five American adults said the pandemic forced them to delay their retirement or not to retire at all, according to Nationwide’s 2021 Tax-Efficient Retirement Income 2021. investigation.

With so many Americans unsure of their ability to retire and unsure of what to do next, financial advisors and professionals play an important role, both practically and emotionally. In fact, according to our sixth Advisor’s authority According to a 2020 study, the main reason investors work with an advisor or financial professional is to have more confidence in their financial future, and the second reason is fear of saving enough for retirement.

To help clients have the confidence they need to prepare for the unknown, consider a comprehensive financial plan that includes the “retirement planning trifeta”: protection, guaranteed income, and tax deferral power.

The importance of protection

According to the Nationwide Advisory Authority study, pandemic losses, asset protection and volatility management were the top three financial concerns for investors. As equity markets have rallied from the pandemic, protecting a portfolio against future market declines and volatility could be the difference between retiring as planned – or waiting years. Yet only 64% of investors had a strategy to protect their assets against market risk, compared to 91% of financial advisers and professionals. Customers could use your help.

Annuities can be an effective option in helping clients prepare for retirement, providing them with the upside potential they want, helping them accumulate more and the downside protection they need to maintain their life. wallet. Since all warranties and protections are subject to the claims settlement capacity of the issuing insurance company, it is important to identify an insurer with superior credit ratings and financial strength.

To help balance growth and protection, Registered Indexed Annuities (RILA) can work for clients with a range of different risk profiles. RILAs provide clients with upside potential based on the growth of an underlying stock index. These could include traditional indices such as the S&P 500 or the Nasdaq 100, as well as specialized indices that dynamically allocate assets, manage volatility, and use other unique strategies. This is balanced with varying degrees of protection against market risk, including a buffer for moderate to aggressive clients, or a floor to provide a more defined level of protection for conservative to moderate clients.

The need for guaranteed income

The Nationwide Advisory Authority’s study also found that protecting against remaining savings and generating guaranteed income in retirement were top priorities for investors, with four in five saying they have a strategy to make the investments. of them. But citing Social Security and defined benefit pension plans as their two main solutions, investors may have a blind spot – and face a shortfall – when it comes to meeting their investment needs. retirement income.

To ensure that clients do not outlive their savings in retirement, annuities are the only product that can provide guaranteed income for life. Annuities can supplement other sources of retirement income or help close an income gap before Social Security begins. Using annuities to generate income and manage market risk can allow clients to continue to invest part of their portfolio more aggressively, for greater growth potential.

According to our advisory authority study, 84% of advisors and financial professionals said using a guaranteed income annuity is important in supporting a sustainable withdrawal rate. Recent analysis of Goldman Sachs Asset Management also suggests that annuity allowances with a guaranteed lifetime withdrawal guarantee (GLWB) can create more income with less risk than systematic withdrawals alone.


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