Seemingly everywhere we turn these days, there’s some sort of controversy brewing. Sports, academia, politics, pop culture – it often feels like there’s no escape.
Even the retirement planning space isn’t immune.
The Department of Labor ratcheted up the drama recently with its controversial fiduciary-only package proposal. The DOL’s misguided regulation would restrict access to annuities, which enable people to create their own stream of guaranteed lifetime income.
Most workers do not have access to traditional pensions anymore. Increasingly, Americans are looking to annuities to provide guaranteed lifetime income. Annuity sales soared to record highs the last two years. And according to LIMRA, people are buying annuities mostly to supplement their Social Security or pension income in retirement.
The median annual household income of annuity owners today is $76,000. About three-out-of-four annuity owners receive less than $1,500 in annuity income each month. This supplements their Social Security income, which averages about $1,540 a month.
More than 4.1 million Americans will turn 65 each year through 2027. That’s more than 11,200 every day and the largest surge of retiring Americans in recent history.
The last thing that the federal government should be doing now is making it harder for middle-class Americans to bolster their retirement income with annuities.
But that’s what the DOL’s fiduciary-only proposal would do. Fiduciaries usually require their clients to have a minimum of $100,000 to invest. Millions of Americans would lose access as the median retirement savings in the U.S. in 2022 was just $87,000.
Instead of forcing through this flawed proposal, the DOL should follow the lead of Congress and look for ways to help people save for retirement. In 2019 and 2022, Congress passed with huge bipartisan majorities the SECURE Act and SECURE 2.0, which made it easier for workers to access guaranteed lifetime income as part of workplace retirement savings plans. These bills were signed into law by Presidents Trump and Biden — with no drama.
We can only hope the DOL does the right thing and withdraws its proposal – without drama or delay.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
