As Americans plan for a secure retirement, guarding against outliving one’s retirement savings has become an important objective. Fewer and fewer folks have traditional pension benefits with regular monthly checks. Most workers have retirement savings in defined contribution plans such as 401(k)s. To make savings last throughout retirement is just as important as building a nest egg in the first place.
Policymakers and consumers are increasingly realizing that annuities provide a proven – and guaranteed – way to ensure that monthly income lasts throughout retirement. A recent study reported that 2021 Q2 annuity sales are up 10 percent over Q1. And what’s even more telling is that sales are up 40 percent over Q2 of last year.
Lawmakers in 2019 made it easier for employers to offer an annuity option in their retirement plans. They’re now working on new policy to streamline current annuity rules and remove barriers, making it easier for consumers to access and use this vital product.
Pending legislation would enhance the rules for deeply deferred annuities. These Qualified Longevity Annuity Contracts (QLAC) start income later in life. The proposal would repeal the 25-percent account balance limit, increase the amount eligible for QLAC treatment to $200,000 and make important changes to promote spousal survivor rights.
Policymakers understand that consumers need to guard against outliving their savings with steady monthly income throughout retirement. 10,000 Americans reach age 65 every day, inching closer and closer to retirement. Some could expect to live 30 years or more in retirement and risk outliving their savings.
Given the versatility of annuities and the ability to craft the product to one’s personal financial situation, they’re incredibly appealing and can offer income protections no other financial product can. As we celebrate National Retirement Security Month in October, it’s a great time for savers to evaluate their personal retirement toolkits and determine if they have the lifetime income tools in place to ensure a long, financially secure retirement.
Kathleen Coulombe serves as the Senior Vice President, Federal Relations, for the American Council of Life Insurers (ACLI). In this capacity, she is actively involved in a multitude of public policy issues on Capitol Hill that impact the life insurance industry.
