The COVID-19 pandemic has been tragic for those who have lost loved ones around the world. It has also shuttered businesses and sent the financial markets reeling. For those preparing for or living in retirement, these are the rainy days for which they’ve saved.
Congress, through the CARES Act, recently made it easier for those with COVID-19-related financial hardship to use some retirement savings to help. But adverse market conditions make it costly to draw down savings now and challenging for retirees seeking income in retirement.
A market downturn like this can be especially devastating for retirees invested in stocks and bonds. This decline not only affects the value of their savings, but its monthly income potential – and how long it will last.
Alternatively, annuities make it possible to have reliable income each and every month in retirement. Late last year, Congress enacted the SECURE Act with new rules designed to make it easier for employers to include annuities in retirement savings plans.
This is good public policy because annuities are the only financial product in the market that guarantees monthly income for as long as a person lives. They protect consumers from turbulent market conditions and answer the question, “Will I have enough to cover my expenses if I live into my 80s and beyond.” Annuities can also provide for surviving spouses. Depending upon the type of annuity, fixed monthly income can begin immediately or income payments can be delayed while receiving interest accruals and/or market returns.
State insurance regulators enforce stringent financial rules to ensure that life insurers have the resources to make every annuity payment. To cover the cost of these guarantees, annuities include charges such as the upfront cost of an immediate annuity or the asset-based fees found in variable deferred annuities. Financial professionals are there to help consumers address their unique financial situation and retirement income needs.
Annuities provide certainty, and challenging economic times like these emphasize the value of annuities to retirees and those working for retirement security.
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