Gen X is Increasingly Interested in Annuities

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Annuities aren’t just for Baby Boomers. Rather, when it comes to annuities, Gen Xers are interested too… very interested in the best annuities 2021.

According to Protected Retirement Income and Planning Study from Alliance for Lifetime Income and annuity data provider CANNEX, Gen Xers are three times more likely than Baby Boomers to express extreme interest in purchasing an annuity as part of their retirement income plan. That’s big news for future retirees and financial planners alike. 

Shifting retirement priorities: According to the study, nearly 90% of all investors desired for their retirement income plan to include guaranteed income payment or principal protection. Annuities accomplish both of these goals. And, while annuities have general appeal across age groups for the reasons above, interest maintained by Gen X (ages 45 to 54) stands out, jumping to 71% compared to other generations. Why? Most of Gen X doesn’t have a pension to fall back on. Only about 45% of people ages 45-54 across public and private sectors own pensions. This compares to 52% for investors ages 55-64 and 65% for people 65 to 75 years old. Annuities, therefore, are an alternative that fills that void. 

Smart financial planning changes: The world looks different after 2020, and that goes for retirement planning, too. Because of low interest rates, 71% of advisers say they adjusted their financial planning. Because of low returns on bonds, nearly half of advisers made additional changes. For those making changes, many are including annuities, with 46% using annuities more for income, 41% using annuities more for asset growth, and 19% using annuities more for tax deferral. Beyond financial trends and from a systematic perspective, the SECURE Act of 2019 made it easier for retirement plan sponsors to provide annuities to participants, which is also encouraging their more widespread adoption. 

Still, a disconnect remains: While many planners are adjusting to meet client’s needs, eight out of 10 financial advisers still report speaking about retirement income planning with nearly all clients age 55 and older. That leaves a huge market of younger investors out of the right retirement conversation. 

The bottom line: Investors want guaranteed income in retirement, and annuities can help them to achieve that goal. This goes for Baby Boomers and those with a ways to go (and save) before retirement. 

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