Will rollercoaster market rides and gut-wrenching drops bring sources of guaranteed income (meaning annuities) into focus in 401k plans?
Yes, apparently.
“Recent market volatility, combined with the passage of the SECURE Act, has put an increased focus on retirement planning, particularly guaranteed income products, which will now become more widely available as an option for those with employer-sponsored plans,” Allianz Life Insurance Company of North America reports.
Research from Allianz Life indicates that plan participants have taken note and are interested in learning more about guaranteed income in retirement.
Findings from the study indicate that 77% of those who currently are enrolled in employer-sponsored plans would consider adding an option that offers guaranteed lifetime income.
Fifty-nine percent indicated they would specifically consider adding an annuity.
Beyond product consideration, 61% of respondents say they are looking for more information on how annuities can be part of their plan.
Coinciding with that finding, 60% of those surveyed are not sure of the benefits of having an annuity in their plan, which indicates a big task ahead for the defined contribution and insurance industries.
Low awareness
“People seem to want guaranteed lifetime income options as well as more information on these types of products, particularly during these volatile times in the market,” Matt Gray, assistant vice president of Worksite Solutions at Allianz Life, said in a statement. “At the same time, there is low overall awareness of annuities, a primary product to help manage the guaranteed income risk.”
Plan participants are clearly starting to hear more about annuities, he adds, “but the next step will be to provide them with relevant information so that they are able to make an informed decision as to which potential options are a fit for their given situation. Ongoing volatility will only serve to increase the urgency surrounding this need.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
