‘Peak 65’ is Here, and Findings Suggest Annuities Can Protect Income

Safeguarding 'Peak 65' Income

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“Peak 65” is here to stay until 2027, where an estimated 11,200 Americans are expected to retire each day for the next few years. New data from the Alliance for Lifetime Income suggests that these employees could soon face financial insecurity from a lack of protected income.

Starting this year, 4.1 million workers will turn 65 every year until 2027, resulting in thousands of employees retiring each day. The new report, “The Peak 65 Zone is Here – Creating a New Framework for America’s Retirement Security,” believes that incorporating protected income solutions, like annuities, could ensure future retirees don’t outlive their savings.  

As some policymakers call for Social Security to raise its full retirement age (FRA) from 67 to 70—further minimizing income for new retirees and destabilizing the traditional “three-legged stool” that encompassed retirement savings for workers before—Alliance for Lifetime Income argues that annuities could serve as a solution for workers wanting to protect their retirement income.

“With the demise of protected lifetime income available through private sector pension plans, the traditional three-legged stool of retirement security – employer pensions, Social Security and personal savings – has collapsed for this Peak 65 generation,” said Jason Fichtner, executive director of the Alliance for Lifetime Income’s Retirement Income Institute and chief economist of the Bipartisan Policy Center. “Unlike older retired Baby Boomers, the majority of Peak 65’ers don’t have pensions, which used to help fill that gap left by Social Security. Our current retirement system is obsolete and it’s time for a new retirement security framework that will help Americans fill this protected lifetime income gap.”

The findings are supported by a recent Ipsos Research survey, which found that 66% of Peak 65 workers are worried about having enough money for retirement, 79% are worried about the cost of healthcare in retirement, and only 24% are “very optimistic” about retirement. The Alliance for Lifetime Income had served as a sponsor for the survey as well.

“Like pensions did for past generations, annuities offer a unique opportunity, especially for middle and working-class Americans, to have the peace of mind knowing they’ll always have a source of guaranteed income in retirement regardless of the ups and down of the markets or what happens to Social Security in the coming years,” added Cyrus Bamji, chief strategy officer for the Alliance for Lifetime Income.

As a higher number of near-retirees fear outlasting their savings in retirement, more advisors are considering the potential benefits annuities could add to retirement income. A 2023 report by Allianz Life and RetireOne found that as a result of the “Peak 65” phenomenon, nearly half of investment advisor representatives (IAR) are currently recommending fixed annuities to clients in need of principal protection. Among advisory annuities, 56% of respondents said they were likely or very likely to refer/recommend the product for clients.

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