As financial experts and investors brace for the eventual market downturn, others are claiming it’s already here. The ins and outs may be debatable, but Monday’s market sell-off is likely doing little to quell 401k savers’ fears.
In a recent study by Lincoln Financial Group, Americans planning to retire in the next decade or so are particularly concerned. Seven in 10 pre-retirees admit they’ll have to sort out a new financial plan or modify their savings goal if they experience more than a 10 percent drop in retirement assets.
Employees even closer to exiting the workforce are (understandably) even more worried. Almost nine in 10 who are planning to retire within three years are looking for a way to protect the wealth they’ve accumulated.
It should come as little surprise, then, that investors are flocking to annuities in droves in attempt to shield themselves from market volatility.
In fact, LIMRA Secure Retirement Institute (LIMRA SRI) announced that fixed indexed annuities sales set a new record in the second quarter of 2018. And researchers with the Institute predict the product’s popularity will continue to trend upward in coming years.
Why? Because younger workers are the most interested in the product. As pensions continue to fade away and concerns over the reliability of Social Security don’t, it makes a lot of sense.
According to LIMRA SRI’s latest report, around four in 10 consumers are open to purchasing an annuity but simply don’t think it’s the right time.
“Nearly two-thirds of this segment is not retired and only three in 10 of the non-retirees plan to retire in the next 10 years. Also within this group of consumers, 61 percent say having enough money to last through retirement years is their single most important objective for their assets in retirement,” the Institute noted in its report.
What should advisors take away from the revelation?
“This research shows that most consumers who didn’t buy an annuity are open to possibly buying them in the future, especially if they are younger and still working. Possibly a follow up conversation down the road and additional education could help the consumer with the decision to purchase.”