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Annuities Appeal to the Middle Class

Financial Advisor Magazine describes its audience as financial planners, registered investment advisors, and independent broker/dealers serving affluent, high-net worth clients. As you would expect, this magazine typically focuses on the merits of very complex investment strategies designed to impress wealthy clients. Fixed annuities are rarely mentioned.

Thus, it was interesting to read an article in their October 2009 issue entitled “Annuities for the Middle Class?” The popularity of annuities with the middle class seemed to surprise the author of the article, Senior Editor Eric Rasmussen.
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Here are some excerpts. The highlighting was added by us:
Since the market collapse last year, more investors have been turning to annuities – the ultimate chastity belt at a time when wild volatility in the stock market has reined in more promiscuous behavior and risk. Given the widespread fear in the Great Recession, it’s no surprise annuity sales have skyrocketed over the last year.

Amid the lofty new numbers, there is also new survey data from insurance companies that suggests the nonqualified annuity marketplace is not only booming but also has a remarkably pure ownership: middle-class retirees. A survey of 1,003 U.S. annuity owners recently conducted by the Gallup Organization for the Committee of Annuity Insurers, a coalition of life insurance companies, has revealed that eight in ten annuity owners have household incomes of less than $100,000. Meanwhile, only 4% earn more than $200,000.

Go down further in the income band, and you find that 42% of these annuity owners have household incomes of less than $50,000, says Gallup. Most of those owners, 69% of them, are already retired.

According to the Gallup survey, 35% of the annuity owners surveyed never had access to a qualified plan when they were working.
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“If you were in the distribution phase and 2008 scared you,” says financial planner Rick Fingerman, the president and CEO of Financial Planning Solutions in Newton, Mass., “and you were frightened out of the market, it might make sense for you to put that in an annuity. So you can at least say I’ve got $1,000 a month guaranteed for the rest of my life.”
As you can see, annuities are remarkably popular with the middle class, particularly in the absence of other products that offer their appealing combination of safety, tax deferral, and attractive interest rates.
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What this magazine did not publish, but which nonetheless was found by the survey, was that over 90% of annuity owners believe they have done a very good job of saving for retirement, and they think their annuities contribute to a great extent to this preparedness. Also, 79% think that annuities are an important source of retirement security and make them feel more comfortable in times of financial uncertainty.
​Articles
  • The Power And Protection Of An Indexed Annuity
  • Are We Hurtling Toward Another Market Crash?
  • Billionaires Dumping Stocks, Economist Knows Why
  • Safeguard Your Retirement Income
  • An Explanation of the Legal Reserve System
  • Annuities Appeal to the Middle Class
  • Understanding Annuity Liquidity Features
  • The Role of Annuities in Estate Planning
  • Why Fixed Indexed Annuities Have Caps
  • Study Finds Fixed Indexed Annuity Returns Attractive and Consistent
  • Understanding How Annuities are Treated Under the Tax Code
  • How a Fixed Indexed Annuity Works and Why Your Money is Safe
  • Where Annuities Fit in Your Financial Planning
  • Why Annuity Sales are Booming During the Recession
  • The Increasing Popularity of Fixed Indexed Annuities
  • The Reasons to Consider a Fixed Indexed Annuity
  • Why People Buy Immediate Annuities
  • Why People Buy Fixed Annuities
  • Retiring in the 21st Century: What It Takes
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​Bob Lindquist
Phone: 913.814.9600

bob@boblindquistkc.com
Safe Retirement Strategies
​
8900 Indian Creek Parkway
​Building 6 Suite 250

Overland Park, KS 66210

*Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation.

​Licensed Insurance Professional. Respond and learn how insurance and annuities can positively impact your retirement. This material has been provided by a licensed insurance professional for informational and educational purposes only and is not endorsed or affiliated with the Social Security Administration or any government agency. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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