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You are here: Home / Annuity Commentary / Can Annuities Solve the Retirement Challenge?

Can Annuities Solve the Retirement Challenge?

January 4, 2013 By Annuity Guys®

Why does it feel like everyone is talking about annuities these days? Could it be due to the approximately 10,000 people who are retiring from the workforce everyday and that these new retirees are looking for a safe and secure location to place their lifetime of savings. Or is it because of the stock market  roller coaster they have experienced throughout their lifetime.

As Annuity Guys®, Dick and Eric talk about annuities every day – that does not mean that an annuity is the right answer for every retiree but it certainly should be part of the retirement discussion.

In this edition Dick and Eric share their thoughts on how annuities should be viewed by retirees and pre-retirees making financial decisions. One click to play or pause…

[embedit snippet=”video-specialist-button”]

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

How about these Retirement Factoids….

  • According to a 2012 report from the Center for Retirement Research, “at Social Security’s earliest retirement age of 62, only about 30 percent of households are prepared for retirement…By age 66, Social Security’s current Full Retirement Age, about 55 percent of house-holds are projected to be prepared for retirement (this figure includes the 30 percent already prepared by age 62)….At a retirement age of 70, about 86 percent of households are prepared for retirement.”
  • According to a 2012 report on the Transamerica Retirement Survey, “more than half of workers (51 percent) are confident in their ability to fully retire with a comfortable lifestyle including 9 percent who are ‘very confident.’…In 2007, prior to the Great Recession, 59 percent of workers were confident including 13 percent who were ‘very confident.’” (p. 14)
  • According to a 2012 analysis of data from the Survey of Consumer Finances, “more than half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65.” (p. 6)
  • According to the 2011 EBRI Retirement Confidence Survey, “28 percent of workers are now very confident that they will have enough money to pay for basic expenses during retirement (down from 40 percent in 2007,” while 12 percent say they are not at all confident about their ability to pay for basic expenses (up from 7 percent in 2007) and another 16 percent indicate they are not too confident (up from 11 percent in 2007).” (p. 8)
  • According to a 2011 Gallup poll of 1000+ adults aged 18 and older, “63% of Americans say they are worried they will not have enough money for retirement — exceeding the 56% who are worried about not being able to pay the medical costs associated with a serious illness or accident and the 55% who are afraid they will not be able to maintain the standard of living they now enjoy.”
  • According to the 2010 MetLife Retirement Readiness Index, “just over half of the respondents report feeling prepared overall for retirement. Eighteen percent strongly disagree that they are prepared. The number of those prepared increases by age. Only a third (35%) of the 45- to 49-year-olds feel prepared for retirement, while 64% of the 60- to 64-year-olds and 81% of the 65- to 70-year-olds feel prepared.” (p. 4)
  • According to a 2010 EBRI analysis, the aggregate “Retirement Savings Shortfall” (RSS) for all ages cohorts in 2010 dollars is $4.55 trillion, for an overall average of $47,732 per individual. Adding nursing home and home health care expense increases the average individual RSS for married households by $25,317. (p. 2)
  • A 2009 AARP survey shows that “nearly eight in ten (79%) adults have either started to cut back on spending (71%) or started saving more money (28%) in the past 12 months… Almost three in four (73%) of those who are cutting back on spending or saving more are doing so in order to save more money for retirement… Older adults (ages 50+) are more likely than younger adults (ages 24-49) to cite this as a major reason (53% vs. 38%).” (p. 3)
  • According to a 2009 analysis of data from the Survey of Consumer Finances, there has been a “significant rise in median debt, from $19,697 in 1995 to $40,300 in 2004, and mean debt, from $58,124 in 1995 to $97,363 in 2004. [There has also been] a rise in the proportion of near-retiree families holding debt, from 79.8 percent to 82.7 percent.” Families headed by older individuals (aged 56-61) held less debt on average than younger near-retirees (aged 50-55), with 77.5% of older and 87.2% of younger near-retirees holding debt. (table 1)
  • According to a 2009 Urban Institute analysis of financial data, “older households typically hold less in stocks and are thus less exposed to market fluctuations than their younger counterparts. Nonetheless, equities account for about half of the assets in the typical account of households age 50 and older.”
  • According to a 2008 AARP survey, “if the economy does not improve significantly, over six in ten workers at least 45 years old say it is likely they will spend less in retirement (69%), as well as delay retirement and work longer (65%). Far fewer (37%) say it is likely they will save more for retirement.” (p. i)

Factoids courtesy of the Sloan Center on Aging and Work

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Filed Under: Annuity Commentary, Annuity Guys Video, Retirement Tagged With: annuities, Annuity, Annuity Guys, Retirees, retirement, Social Security

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Annuity Guys®, Dick & Eric, enjoy entertaining you with their off-beat sense of humor, lighthearted sarcasm, and no shortage of expertise on annuities as they discuss today's retirement challenges. Got annuity questions... they've got annuity answers!


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  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.


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