Over the last five and half years, we’ve seen a 192 percent increase in a bull market … it’s been a nice ride! However, the average bull market only last four years. Are your clients ready for the next big market change?
Even the experts aren’t sure how long this performance will last, and our clients are more uncertain than ever about when they will retire. Worker confidence is down 43 percent. With only 19 percent of them having some type of pension outside of Social Security, many are concerned with their accounts taking any losses ... and having enough time to make up with gains.
Now more than ever, clients want the flexibility to turn on income whenever they need … and not be locked in.
Of the 76.4 million baby boomers, the oldest are currently in their 60s, and the youngest are entering their 50s. That puts the median age at 57, and we’re finding that 50 percent of retirees are retiring sooner than expected.
So, if a 57-year-old client is still looking to retire age 65, they have about eight years left. But in reality, the average retirement age is closer to 62, so they would only have about five years left. Maybe it’s time to start looking at age-based, in-service withdrawals. Now might be the time to sweep their gains off the table, locking them in and eliminating risk to their principal.
We’ve got to ask ourselves: What are the ramifications for staying at the party too long? Do these baby boomers have time to make up for any market losses? What would it take to get back to even? Based off where we are in the market now, where are we going next.
With a fixed indexed annuity, a client near retirement can protect a portion of their portfolio from downturns and still participate in gains. When the market is up, interest is locked in and account value is intact with any growth that might have been credited – not capturing 100 percent of the gain, but protecting the loss to principal when the market goes backwards. Even if the market would be down every year, with a fixed indexed annuity, there still is a minimum guarantee somewhere close to 1 percent.
The Bottom Line: Now is the time to sweep gains off the table and reduce portfolio volatility. Talk to your clients now – you never know when the bull market will end.
Sounds like a line from Forrest Gump, doesn’t it? That may be the case, but the phrase also serves as an apt description for one of the major benefits of fixed annuities: simplicity. I’ve never a client complain because their portfolio or financial plan was “not complex enough.” Have you?
Couple simplicity with tax deferral, liquidity, low to no fees, and guaranteed rates, principal and income, and you have a very desirable product for your conservative clients and those looking to build a solid foundation under a more aggressive portfolio.
Oh, and how about two more benefits that may be the most important of all, especially in today’s economic environment? Correction protection and increasing future income.
A market correction is imminent – perhaps not this month or this year, but potentially next year or shortly after. Existing or soon-to-be-realized market gains are increasingly in jeopardy if they’re not locked in soon. A fixed indexed annuity can protect those gains and give your clients the chance to participate in near term gains, yet to be, before the correction.
Concerning income: If generating income now is important, will is be any less so in the future? No, it will be more critical in the future. Increasing income riders on fixed indexed annuities can guarantee future income increases for minimal cost compared to other alternatives.
The Bottom Line: Simplicity has value and is only one of the many benefits that fixed annuities provide. With a market correction on the horizon, staying in place and not going backwards is progress.
© 2018 Ash Brokerage LLC.