Millions of Americans face a worrisome challenge when planning for retirement: how to manage their savings to cover expenses throughout retirement. No one knows how long they’ll live, so how can they plan their spending?
Fortunately, there is a can’t miss way to address those concerns: an annuity.
June is Annuity Awareness Month, a time to focus Americans on the only financial product in the marketplace that offers a guaranteed, steady, reliable income for life. Annuities can supplement Social Security providing an additional source of income that will be there each and every month.
This peace of mind is especially valuable when faced with more questions than answers.
An annuity is an enforceable contract between a consumer and a life insurance company. The consumer pays the insurer who commits in writing to pay the consumer income.
There are a number of different annuity options available. Some offer income now (immediate), some later (deferred). Either way, annuities offer the owner guaranteed income for life. And annuities can also provide income to survivors.
Robust state and federal rules govern annuities. State insurance commissioners enforce stringent solvency rules to ensure every annuity payment gets made.
Many states, including most recently Texas, have adopted the National Association of Insurance Commissioners’ enhanced model regulation that requires financial professionals to act in the best interest of consumers. It raises the bar of financial professionals, enhances consumer disclosure, and addresses material conflicts of interest.
The NAIC’s model regulation closely aligns with the Securities and Exchange Commission’s Regulation Best Interest (Reg BI) which requires broker-dealers to comply with similar obligations. Both the model and Reg BI support the right of consumers to choose the type of financial services they want, whether it be one-time commissioned-based support or ongoing advice with asset-based fees. Thus, consumers retain access to vital information and education about annuities.
Together, Reg BI and the NAIC’s model regulation provide strong consumer protections. Americans looking to secure peace of mind in retirement with an annuity will have harmonized state and federal protections that support them, no matter which state they call home.
(To learn more about annuities, join ACLI’s Twitter chat on Monday, June 28 from 1-2 p.m. ET. #SecureRetirement2021)
Jim Szostek is Vice President & Deputy, Retirement Security at the American Council of Life Insurers (ACLI). He helps guide ACLI policy on legislation and regulations affecting the U.S. retirement system. Prior to joining ACLI in 2008, he held positions at CIGNA and The Hartford.
