Saving money for retirement is a rather simple process. Put money into an account, let it compound over time, then do it some more. Making that money pool into a reliable source of income as we reach our golden years remains challenging. There are numerous financial factors. And now that longevity poses a significant barrier to our savings, experts, consultants, and individual investors are turning to annuities to address the income issue. Due to several recent initiatives and platform updates, Fidelity is making it simpler for participants in workplace plans to purchase annuities to fulfill their income needs. And with it, the company has a leg up on competitors and may have a potent new asset-gathering weapon. The Demand for Money Even though COVID-19 has caused certain statistics to be off, the trend toward longer lifespans is upward. In the United States, there is a 72% likelihood that one of a married couple will live to be 85 years old and a 45% chance that one will live to be 90 years old. Even the likelihood of one of them reaching the age of 95 is 18%. Furthermore, some researchers predict that owing to medicine and advanced medical technology, Americans born today could live well into their 100s. Our longer lifespans, however, are both a benefit and a curse. Simply put, we require more funds to support our retirement. Thus, longevity risk—the chance that you’ll outlive your money—is a genuine worry for many savers, financial experts, and political commentators. The current, very volatile market makes this point extremely clear. Investors may need to take on greater risk due to lifespan concerns to generate enough income potential. But recessions might have a significant effect on retirees. And because of this, policymakers, experts, and ordinary investors are now closely scrutinizing annuities. Annuities’ guaranteed income reduces the risk of outliving savings. Fidelity Gets its Platform Ready Getting the annuity in the first place is the issue. The two main types of annuities are qualified and non-qualified, though there are innumerable variations. When it comes to annuities, we often consider them non-qualified. They are acquired using funds from sources other than retirement accounts like 401(k)s and traditional IRAs. The problem is that most people store their retirement funds in retirement accounts. Additionally, most brokerage firms and 401(k) record keepers do not provide the option to convert retirement funds directly into an annuity. There are, therefore, some hurdles to overcome if you desire one. It’s a process that takes time and effort. Fidelity, though, wants to alter that. The enormous asset management has over 8 million workers close to retirement on its 401k/403b workplace savings platform NetBenefits. To do this, Fidelity developed a brand-new product called Guaranteed Income Direct. Fidelity is working swiftly to complete the platform unveiled last November and is expected to go operational in the first half of 2023. The aim is simplicity. Investors can use their retirement funds to buy an immediate income annuity with a few mouse clicks. Because of its breadth and reach, investors can save money by taking advantage of cheaper fees and institutional pricing. Many insurers have already committed to the platform, and a large amount of technology will assist investors in determining how much to annuitize and selecting the best income annuities for their particular circumstances. Fidelity’s new product might revolutionize the asset management and workplace retirement sectors. Investors can easily resolve one of the most significant retirement problems: outliving their money. Fidelity may also benefit significantly from this. Suppose the guaranteed income program is a success. In that case, Fidelity might integrate it into its standard brokerage platform, making it simple for IRA and rollover customers to purchase annuities with their qualified funds. Utilizing the approach might be useful in luring clients away from competitors like Vanguard and Schwab. Investors Benefit The new platform from Fidelity ultimately benefits investors. Other record keepers and asset managers will likely follow index ETFs’ lead in driving down costs for investment management and boosting savings rates on cash holdings. A comparable technology that will assist BlackRock in converting its target-date funds into target income annuity products has already been unveiled. Many more will adhere to this. Fidelity’s Guaranteed Income Direct product will make it easier for retirees to get affordable guaranteed income. And that will be a huge win for all of us.
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Bio:
Stuart Hunsicker is a managing partner, retirement specialist and federal employee benefits specialist here at Purpose Driven Financial Services. As firm co-owner with Zar Razack, the two have a natural chemistry that allows them to work together effortlessly. “Once we decided to really commit to pushing the firm forward, we knew that we could be effective,” Stuart says. “We work very well together and complement each other’s strengths and weaknesses.”Stuart considers himself more of the “analytical and numbers” half of the duo. With more than 20 years of experience in the financial services industry, he has become an expert at assessing each individual person’s situation and deducing how much they might need in retirement. Once he arrives at the target number, Zar steps in as a specialist to design a plan that includes specific elements that will help clients reach that number.A VCU-Richmond graduate with a degree in finance specializing in business, Stuart has seen nearly every side of the financial industry. Early in his career, he worked for smaller firms and was in charge of trading and investment portfolios. He also held a Series 24 license and signed off on variable business within the firm. “I wore a lot of hats,” he says. “I focused on the investment side, but when the markets crashed, I just took too many phone calls with crying voices on the other end.”Those tough phone calls led him into the insurance side of the business. He now considers “retirement surety” his focal point and believes in making sure that each client is prepared for retirement before they move to the next step. Once the retirement plan is put into place, the rest is icing on the cake, helping give the client financial freedom.PDFS certainly isn’t exclusive, but Stuart is extremely passionate about working with teachers and federal workers. His beautiful wife of nearly 20 years, Andrea, is a teacher, so he’s very familiar with the issues they face and tends to gravitate toward clients who serve and assist. He has also experienced many of the hypothetical scenarios he raises to clients. What if a spouse passes away suddenly, or what if you’re forced into retirement early? Stuart has been there, and he knows how to navigate those rocky waters.He and Andrea have one son, one daughter and eight cats. “We’re the crazy cat house,” he says. His oldest cat is almost 20 years old and was the first to join the Hunsicker family, even before Stuart and Andrea married. The first cat needed a friend, of course, so they adopted one more. Andrea always loved tabby cats, so when her colleague told her that a stray tabby gave birth to a litter of kittens in the backyard, the family loaded into the car to have a look. “When we arrived, there were three kittens. My wife fell in love with the tabby, and my daughter took to a different one, then we couldn’t just leave the third one behind,” Stuart says. “At that point we were known for being the cat people, and it was at that point that three more found their way into our family.”Stuart is a massive college basketball fan, even making a trip to the 2022 Final Four. Though he doesn’t have much free time, he and Andrea love to attend sporting events. Stuart also enjoys spending time with family, and they often go shopping, to the beach or to try new local restaurants. He says, “We’re just a normal family that loves being around each other.”
