Many Americans are finding themselves in a position where they want to, or have to, retire early. First off, the old concept of retiring at age 65 is not holding true for many. Also, age 65 is no longer the time when you get full retirement benefits. That age has increased to over age 66 depending on when you were born. But, there are many factors that determine when a person wants to start taking benefits.

We know that the amount of monthly payments increases by about 8% per year if one is able to wait until age 70. But health issues can make early retirement unavoidable. Many people can’t keep their jobs till age 70. Some people might have lost their jobs and have to start taking payments prior to full social security and start around age 62.

There are many factors that weigh into an individual’s decision. But one thing remains true, and it is the fact that they need an income that can support their lifestyles. We in the insured products business have options and solutions. Let’s look at some…

We are all familiar with the split annuity concept. A person retires prior to receiving social security and doesn’t want to start payments. They may be waiting for the increased amount at age 70. So, we provide a SPIA (Single Premium Immediate Annuity) to fill the gap prior to the Social Security benefits kicking in. Maybe we can provide for them an amount that would be equal to a reduced Social Security benefit. The client might be concerned about needing even more money at age 70.

Today the client can purchase an FIA (Fixed Index Annuity) with an income rider. Let the account grow, and start receiving the payouts at age 70 as well. There are many solutions in the fixed arena. I think it would be a smart idea to be speaking with our younger pre-retirees or post-retirees and show them what we can do. Need help with the plan and illustrations? Give one of our marketers a call… that is what we are here for.

We are all familiar with the “Rule of 72.” You know, we can find out how long it will take for an amount of money to double at a certain interest rate. Example: if a financial instrument will earn 6%, you divide 6 into 72 and the money will double in 12 years. Simple… right? Well, not so fast.

If that annual 6% earnings rate is being taxed every year, it will take longer. Yes, an annuity that grows at 6% annually will double in 12 years. A taxable investment will not, as taxes have to be paid each year. So, I am not suggesting that your clients should forgo equity and taxable investments. I am just pointing out the beauty of this annuity product and I believe it will be more important in the years to come. Why do I say that? Please read on.

There is a change going on in America. We are printing more money than ever and it looks like it won’t stop. Maybe it’s a good time to remind ourselves that the US government is not handing out “their money.” They are handing out “our money.” You see, we all know that our federal government is not building products, making new inventions, or making payroll. We do that as Americans. But you and I must pay for these spending sprees. Now, I am not here to judge the benefits of any of the programs the government has enacted. I am here just to state that they must be paid for and tax rates will increase all across the board. So therein lies the beauty of tax deferral.

Can I also remind all of us of a great benefit to non-qualified annuities? There are no required minimum distributions with the non-qualified annuity. What a great place to accumulate money to be passed down. And, in the FIA, a client can change the allocations inside the product without selling an investment product and paying tax on the gains. In an annuity, first dollars out are taxable as they would be the gains. And after that, it is just a return of principal.

Can I just state one more thing? Many people have a portion of their portfolios in fixed income and many have that money with a fee based advisor. I do, and he does a great job. But, it was pointed out that if a client was earning 1.5% in the fixed income account and paying a 1.5% fee, it was a wash… no gain. But, what if your clients had a portion of their fixed income account in annuities? No annual fee and a minimum guarantee. If it was a MYGA, there is a gain every year.

So, remind your clients of the beauty of tax deferred growth and the ability to make their own decisions as to when they want to start drawing money from their account. And as always, if you're looking for behind the scenes assistance or more sales tips, schedule a quick call with one of our knowledgeable marketing consultants.