Did You Know?
- That, as of the first quarter 2011, the combined net assets of U.S. variable annuities were valued at nearly $1.6 trillion, an 11% increase from first quarter 2010 and the highest level ever recorded?
- In 2010 fixed annuity assets were valued at $659 billion a 6% increase from 2009?
- That in 2010, the total average expense difference between variable annuities and mutual funds was 1.01%?
- In 2011, the contribution limits range from $5,000-$6,000 for an IRA, $16,500-$22,000 for a 401(k) and $200,000 plus for a non-qualified annuity?
- That the average number of funds per variable annuity contract was 50 in 2010, of which 47% of assets were invested in equities, 11% in bonds, and 20% in fixed-rate accounts?
- That the guaranteed lifetime withdrawal benefit was offered on 79% of variable annuities in 2011 and was elected by 65% of contract holders?
- Boomers who own annuities have a higher confidence in retirement expectations, with 92% believing they are doing a good job in preparing for retirement?
Tools to Assist in Your Investment Decisions
IRI Research: Retirement Planning and the Elder Market
Median Net Worth of Families with 75-year or Older Head of Household 20% Higher Than Early Boomers
The Insured Retirement Institute's report, "Retirement Planning and the Elder Market: Advisor Strategies to Understand and Work with Senior Clients," explores the challenges advisors face in conveying pertinent information to older clients, a market segment that is growing in both number and net worth. The report found the highest median net worth is among individuals between ages 55 and 64 while senior citizens, age 75 years and older, have a net worth nearly 20 percent higher than that of Boomers between ages 45 and 54.
IRI research found that two-thirds of advisors report their clients have asked them about annuities; and, Boomers identified guaranteed income and principal protection as the most important trait of a retirement investment. During the retirement strategy discussion, advisors must be certain their elder clients understand all the options, features, benefits and costs of the annuity products under consideration.
The report also found that social and family issues take on a greater importance for older investors, often including a variety of aspects related to lifestyle changes in retirement and the participation of family members and others in the decision-making process.
The report also found:
* The number of Americans between the ages of 55-59 grew 46% since 2000; the number in the 60-64 year-old segment grew 56% during the same period.
* There has been notable growth among the oldest Americans, a 30% increase in the number who have attained age 85 over the past decade.
* Boomers, defined as those who are between ages 60 and 65 in 2011, are in need of retirement income advice, 51% believe they will not have enough money on which to live comfortably through retirement, and two-thirds would like to leave an inheritance to their loved ones.
* Fewer than half (45%) of older Boomers have ever consulted a financial advisor.
* Only 58% have determined the amount of money they will need to save for retirement.
The key findings and analysis can be found HERE.
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