Indexed Annuity Surge Continues

Indexed Annuity Surge Continues

February 29, 2016 – According to a recent InvestmentNews article citing a LIMRA Secure Retirement Institute report, 2015 saw a 13% increase in indexed annuity purchases over the prior year to a record $54.5 billion.

To put this figure into perspective, Starbucks’ Fiscal 2015 Annual Report indicates $54.5 billion is just $3 billion MORE than the coffee giant’s total net revenues . . . SINCE 2012!

When was the last time you saw a Starbucks where someone wasn’t waiting in line?

Not that there’s any direct correlation between retirement income distribution planning and the caffeinated brew but it speaks to the ongoing (and growing!) popularity of both and there are some similarities:

Both are optional purchases people make daily.

Each can be tailored to individual preference.

Consumers enjoy the end result despite any long line anxiety (or, in the case of annuities, the application process).

Case Study

(NOTE: For compliance purposes, this case study is a hypothetical example presented for educational purposes only)

Consider the 60 year-old freelance consultant, still in demand, who plans to work another ten years in order to maximize his Social Security benefits.

He has no pension.

Still reeling from the aftereffects of the Great Recession, his greatest fear is losing his remaining accumulated wealth so he simply “parks” the bulk of his funds in a safe, guaranteed account, currently paying about 3.0% a year.

The Dilemma: With ten years to go before he plans to start drawing this down to live off of, how does he earn a higher return without sacrificing safety?

The Solution: Dedicating a portion of his portfolio to an Indexed Annuity from a highly rated carrier with a Guaranteed Lifetime Income Benefit (GLIB) Rider that does this:

A. Guarantees his account will be credited 7.0% per year until he chooses to start drawing it down.

B. Guarantees he will then receive 5.4% of the accumulated value for as long as he lives.

C. Guarantees he’ll never lose a penny.

All things considered – safety, security, guarantee, risk, capital preservation, legacy and life expectancy among them – this solution complements his retirement income planning strategy nicely since only Social Security, pensions and annuities can guarantee income for life.

Indexed annuities, like coffee, aren’t for everyone.Stuart Miles Income

But they are undeniably an efficient and effective method of distributing a portion of one’s accumulated wealth over a lifetime of unknown duration.

Converting assets to income when one’s work life comes to an end needs to be a top priority for those seeking retirement planning advice.

And indexed annuities can fill that cup nicely.

Image courtesy of Stuart Miles at


Finn Financial Group