The Transition Phase

The Transition Phase

Annuity sales typically fit into one of three categories: accumulation, distribution or wealth transfer. However, with the rise in the importance of retirement income planning and all of the income riders now available, there is another category: transition.

Individuals who are 5-10 years from retirement are usually considered to be in the transition phase. These clients have a few more years to invest for growth before they need to start their retirement income stream.

Think about this hypothetical client:

  • Age 60
  • Starting income at age 65
  • Depositing $100,000 into an variable annuity

Assuming a 9.2 percent compound rate of return, in five years the variable annuity would be worth $155,000. At a 4.5 percent payout rate, it would generate a lifetime income of $7,000 annually.

Now, take the same client and invest his $100,000 in an indexed annuity with a lifetime income rider. This client could be better off because even in a Doomsday scenario the indexed annuity should perform at least equal to the variable annuity, while keeping the charges much lower than traditional VA fees and expenses.

With so many income rider options available on indexed annuities today, it can sometimes be a challenge to determine which rider is the best choice for your clients in transition. At Ash Brokerage, we take great pride in the fact we are one of the largest independently owned marketing organizations in the country and always work to make sure we are recommending the product that is most suitable for each situation.