Annuity Awareness or Bust
You might not be, well, aware of this but June is Annuity Awareness Month.
Yes, I can hear you thinking, “Do we really need another awareness month in our lives? After all, isn’t it already Student Safety Awareness Month?” It is, but do those kids know how to keep safe through retirement? No, it’s all “look both ways!” and “be sure to buckle up!” However, by the time they retire, the only plan still available will be to become Soylent Green.
Seriously, though, we need some positive annuity awareness. There’s a war on out there with the Suze Ormans and the Ken Fishers of the financial world badmouthing annuities until the mere word is radioactive. In the meantime, they are leading average investors down the path of “Sorry, but you decided to retire during one of our most unfortunate crashes! Just reboot your savings at 67 and try to retire again at some later time! Thanks for the lovely fees, though!”
To be realistic, the annuity industry has a bit of ground to make up. Sure, fixed annuities are inherently safe, but they haven’t been the most transparent products. Some of the two-tiered products of several years ago had so many moving parts they might have been designed by Rube Goldberg (if you don’t know who that is, would you please help me figure out how to get my phone to stop inexplicably alerting me?). We also suffered from some aggressive sales tactics that caught the attention of media and regulators. The industry cleaned up and says it is ready and able to be a serious partner to solve the retirement crisis.
People are saving about 4 percent of their income. Pensions are going the way of dial-up modems. The Social Security Administration will be on the streets begging for spare change by the time millennials retire.
What options are left? The Wall Street casino? Mattress? People want the security their parents (or maybe grandparents) had, but now they have to buy it themselves. But consumers don’t realize that yet.
How could they when they are frightened by the Internet? Go Google “Should I buy an annuity?” and the first thing you will see will “7 reasons not to buy an annuity.” It doesn’t get a whole lot better after that. Type in “Should I buy a mutual fund?” and you’ll find all sorts of helpful advice on when you should buy a mutual fund and how much you should put in it.
We all have high hopes for this effort. After all, America’s future is riding on it.