Recently, a collective of researchers, life insurers, and others gathered in Washington to sell the world on the notion that retirees need large companies to offer a form of income that will last beyond employment and into their retirement years. The uncertainty of life insurance providers being capable of guaranteeing annuity income streams is becoming painfully clear. In this day and age, according to leading experts, it’s unsettling to see life insurers unable to guarantee something as basic as an annuity. Moreover, it leaves many to wonder whether the idea of “Peak 65” will become more of a reality as baby boomers push retirement beyond current standards in 2024.Retirement programs are beginning to face new challenges due to an increasingly aged population entering retirement without adequate income. As individual citizens prepare to face their inevitable retirement, it rapidly decreases the available resources for funds meant to provide youth programs. Younger generations are already affected by a lack of retirement funding before they even understand what it means to retire.Typically, we have seen the investment markets do pretty well for investors. Diversified portfolios outperformed most annuities, utilizing a mixture of cash, stocks, bonds, and additional assets. The fact is that providing value guarantees as an annuity seller or life insurer is not only expensive but also complicated. Unfortunately, a well-trained team of advisors must persuade citizens to insure their retirement income. Most contribution plan participants are awaiting an environment offering combinations of funds similar to 401(k) style plans. This type of funding controls itself and guarantees income rather than choosing one or the other.Statistically speaking, women show more interest in annuitization compared to men. Smokers also show a strong interest in deferred annuities, as they are often at a higher risk of dying early. That being said, it’s important to note that a stream of benefits like the deferred annuity doesn’t begin until 85 or older. Such an emotion-based preference indicates underlying financial factors beyond the scope of average economic analysts.The concept of “guaranteed” may differ greatly from person to person. While most individuals may agree that the idea of “guaranteed” annuities sounds great, we must relocate to the most appropriate definition of “guaranteed.”
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