A national retirement income crisis is brewing, but no one seems to be paying attention. In response, a coalition of 24 major insurers and asset management firms launched a public information campaign Thursday to educate consumers and financial advisers about the need to include annuities in a retirement income plan.
"The Alliance for Lifetime Income believes the possibility of outliving hard-earned savings is a real threat to the financial and emotional well-being of Americans currently in or approaching retirement," said Colin Devine, the alliance's educational adviser. The goal of the public information campaign is to shift the national conversation from building investment portfolios to creating income portfolios.
"Our survey shows even people who spend their whole lives growing their savings worry they will be unable to maintain their desired lifestyle in retirement," Mr. Devine said.
"The primary goal of this project is to educate people about the risks they face in retirement," he added. "It is not product-specific."
Nearly half (48%) of baby boomers and Gen X household ages 45 to 72 with investible assets of $75,000 to $1.99 million are approaching their retirement years without protected monthly income other than Social Security, according to the Alliance's research. On the flip side, 88% of households in the survey with pension or annuity income say they are confident that their retirement money will help them achieve their lifestyle goals while protecting them from market losses or unexpected expenses.
Separately, new research from Allianz Life Insurance Co. found that Americans are becoming more comfortable with market volatility in the short term, but market gyrations so far this year have them increasingly interested in finding ways to protect their savings from such volatility.
More than one-third of respondents in the 2018 Allianz Market Perceptions Study admitted that recent market volatility is making them anxious about their nest egg, and 57% said they would be willing to give up potential gains for a product that protects a portion of their retirement savings — up from 48% in 2015. The Allianz survey was conducted in April with a nationally representative sample of 803 adults with investible assets of $200,000 or more who are not currently retired.
The goal of the alliance's multifaceted, multiyear educational program is to raise awareness among consumers and advisers for the need to include protected lifetime income solutions, such as annuities, within a comprehensive retirement plan to help mitigate the impact of the rising cost of living and health care, market volatility and longer lifespans.
"Now is the time for the industry to help educate more Americans on the risk of outliving their money so they can enjoy their retirement lives," Mr. Devine said.
"Everyone is hard-wired for saving," he said. "The message is you should start retirement income planning, and the younger someone does that, the better."
That message includes educating reluctant financial advisers about the latest innovations in retirement income solutions.
"This is not your grandfather's immediate annuity," Mr. Devine said.
"These new products are flexible and offer riders, such as long-term care coverage, without committing clients' assets irrevocably," he said. "The compensation system has changed, too, with a host of new fee-based products to fit into an adviser's business model."
A new website will host a checklist for consumers to use to discuss guaranteed monthly income with their financial advisers. (The site does not include links to help consumers find a financial adviser.)
Acknowledging that annuities are often seen as complicated, confusing and expensive, the alliance has pledged to work to simplify language that the retirement industry can use with consumers and financial advisers to answer common questions about lifetime income solutions.
"No adviser wants to sell a product they can't explain," Mr. Devine said.
The members of the Alliance for Lifetime Income are: AIG, Allianz Life, Axa, Brighthouse Financial, Capital Group, Franklin Templeton, Global Atlantic, Goldman Sachs Asset Management, Invesco, Jackson National Life, JP Morgan, Lincoln Financial, Macquarie, Mass Mutual, Milliman, Nationwide, Pacific Life, Protective, Prudential, State Farm, SSGA, TIAA, Transamerica and T. Rowe Price.
Mr. Devine declined to comment on how much money the 24 firms have committed to the nonprofit project.