ANNUITY
Annuities Provide Nourishment In An Income-Starved Environment Adding an annuity to a client’s retirement portfolio can increase retirement sustainability as well as provide a legacy. By Susan Rupe
J
ust as food sustains the body throughout its lifetime, an annuity sustains a client’s savings throughout their retirement. Just how important an income annuity is to the success of a retirement portfolio was the subject of a recent webinar by Tamiko Toland, director of retirement markets for CANNEX, and sponsored by the National Association for Fixed Annuities. CANNEX looked at the use of annuity income incorporated into the fixed income allocation, and how that would affect the retirement portfolio sustainability. Among the findings: 38
InsuranceNewsNet Magazine » June 2022
» The annuity improves the sustainability of savings throughout retirement.
» Characterizing the annuity as part of
the fixed income portfolio can further benefit retirement outcomes, particularly when the portfolio allocation leans more toward the fixed income side.
» The annuity can increase retirement sustainability as well as legacy.
» Equity exposure contributes to both retirement sustainability and legacy.
These findings apply to any form of guaranteed lifetime income, Toland said, whether it comes from an income annuity or guaranteed lifetime withdrawal benefit. The research looked at whether the retiree would run out of money over the course of retirement. In addition, the research
looked at legacy, or how much money would be left over when the retiree dies. Three different asset allocations were explored in the study.
» Conservative: 30% equity/70% fixed » Balanced: 60% equity/40% fixed » Aggressive: 70% equity/30% fixed The researchers added annuity income in 5% increments starting at 0% and ending at 30%. Researchers looked at a scenario in which the annuity was separate from the remainder of the portfolio and a scenario in which the annuity was included as part of the fixed income allocation. The percentage of annuity “based on the amount of money put into the annuity on the first day of retirement,” Toland said. “And for the purpose of the study, we used
