Annuities

Inflation: Your Best Lead Generator of 2019


Annuities

Inflation. It’s been called the cruelest tax of retirement. But as an industry, we’ve failed to talk about income increases for the last 10 years. The inflation rate has been near zero for a long time due, in large part, to quantitative easing.

It’s easy to forget the devastating effects of inflation. However, over time, the same income will be able to purchase fewer things than it does today. Suddenly, your clients will wake up and feel their cash flow is constrained by more expensive items. That is especially true with items such as higher education, health care, and long-term care.

Most Americans will plan for their income needs through qualified account balances, nonqualified savings, a few pension plans that are still available, and Social Security. Of all of those, Social Security is the only source that potentially increases with inflation. For 2019, recipients will receive a 2.8 percent increase from last year. Other forms of income – guaranteed or not – don’t have a built-in feature for inflation protection.

How many retirees are happy with a raise in their income? I guess that no one will return the additional cash they receive in 2019. So, the conversation you need to have with your clients is: “If you like the raise you got from Social Security, let’s talk about doing the same with the rest of your retirement income.”

I bet if you talk with your clients about their recent raise from Social Security, they would likely come to your office to learn how to do it with the rest of their retirement income portfolio. That question alone might be the best lead generator you use at the beginning of 2019.

 

Winning Strategy

Think in terms of after-tax, after-inflation income. Help your clients understand how they can give themselves a raise by addressing inflation in their retirement plans.  

 

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

 

Retirement Inflation Lead Generation

3 Ways to Protect Against Inflation in Retirement


Annuities

More Americans are living to age 100 than ever before and the number continues to grow. If you are looking at separating yourself from the competition, you must address the impact of inflation on both income and assets for your retirees.

Some people consider inflation to be the cruelest tax of all. It slowly eats away at the value of the dollar over time. Most people don’t feel it year-by-year. But at some point in the future, the client will wake up and say they can’t afford the same things they did at the beginning of retirement. That’s on us.

One of the best strategies to protect income erosion is to maximize guaranteed income streams that have inflation protection. Below are a few examples.

  1. Social Security – This income stream has a built-in inflation hedge with annual increases tied to an index reflecting consumer price increases. If you position Social Security correctly, and leverage its growth past Full Retirement Age, the higher income grows with the index. This provides a higher likelihood that the retiree will be able to afford the same things in 20 years that they do today.
  1. Guaranteed Income Annuities – With any asset that you control, you can leverage the power of guaranteed income options available on some annuities. It’s important to realize that any person should limit the amount of funds that go into annuities to the proper allocation. If too much of a person’s assets go into a conservative vehicle like annuities, it can actually decrease the probability of retirement success.
  1. Inflation Riders – Several income riders can provide increases tied to the underlying index. Single-premium annuities have options for a guaranteed 3-5 percent inflation adjustment. You need to understand the client’s risk tolerance before deciding which solution is appropriate for them. Maintaining control is an important aspect with many clients that should not be overlooked.

Regardless of the solution you provide for inflation, make sure you don’t make your client sacrifice their standard of living due to loss of buying power.

 

Winning Strategies

Protect clients from inflation. Make sure not only their assets but also the income streams increase with inflation during retirement.

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

Retirement Inflation Annuities Mike McGlothlin Social Security Guaranteed Income Annuities

Making the Comeback Count


Annuities

Everyone loves a comeback. How many time have you watched a sporting event where the losing team suddenly comes from behind? It doesn’t matter the sport – at that point, nearly everyone cheers for the underdogs. 

 

As thrilling as it is, many comebacks end in disappointment. The losing team expends so much energy and effort, they don’t have enough in their tanks to win.

 

 Seems familiar, doesn’t it? 

 

Are you preparing your clients for a retirement comeback but a shortfall in the end?

 

Sometimes, we have to help clients make a comeback – they didn’t save enough during their working years to get the income they were hoping for. You have to come to their rescue so they can “catch up.” Even if they did save enough, we too often focus on just getting them to the goal line. Great – now, it’s time to finish the game.

 

Unfortunately, many people get seven to 10 years into retirement and realize that they have fallen short in their plan. Inflation begins to take a toll on their spending. Most notably, the cost of health care increases at a rate much faster than other goods and services, and puts pressure on them to make adjustments. By planning ahead – looking beyond just “catching up” or making it to retirement – you can help position both guaranteed income and inflation protection. 

 

Winning the Game

One of the easiest ways mitigate inflation is to push Social Security to age 70. Social Security typically has an inflation component that increases the income annually, even if at a slower rate than other inflation indices. Other income sources provide guaranteed options to increase the monthly income by 1-5 percent annually. And, other riders allow the income to increase by changes in the underlying crediting method. Either way, by increasing the client’s income, you have have helped push them closer to the top of winning their income game – longevity and inflation. 

 

Winning Strategy

Don’t be like the teams that get behind early and spend too much energy coming back, only to lose in the end. Make sure your clients complete the comeback with inflation protection in addition to guaranteed income. 

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

Annuities Retirement Longevity Inflation