Posted on February 21, 2020

Demographics, Longevity Risk, SECURE Act – Create Unique Opportunity for Lifetime Income

WASHINGTON, D.C. – The annuity industry is poised for significant growth in the coming years, according to the State of the Retirement Industry, a report by the Insured Retirement Industry (IRI).

Consumers are concerned about retirement risks and outliving savings, uncertain how to use retirement account balances to create sustainable lifetime income and are worried about potential Social Security insolvency and rising medical costs. These factors are putting insured retirement income squarely on the radar of retirement savers and financial advisors.

IRI’s report covers trends and significant events over the past year and explores themes likely to emerge in 2020. This year’s report includes review and analysis of demographic factors and their expected impact on the industry, market and product development trends, an overview of public policy initiatives affecting the industry and insight on the importance of financial advisors to help consumers prepare for retirement.

While persistent low interest rates may impact sales in 2020, emerging opportunities as a result of enactment of the federal SECURE Act and the development and increased availability of newer products such as structured annuities offer promise of greater consumer access to protection and lifetime income products.

The SECURE Act, signed into law in December 2019, lowers barriers for smaller employers to offer workplace retirement plans, reduces barriers for workplace plans to offer lifetime income products and will require retirement plans to provide an illustration of how much monthly income can be generated by a retirement savings account.

“Last year saw the culmination of years of hard work to address the nation’s retirement crisis,” said Wayne Chopus, IRI president and CEO. “We were able to get legislation across the goal line at a key moment where fewer and fewer workers are covered by workplace pensions. Research shows that workers with access to an employer-provided plan are more likely to save. The SECURE Act also will make it easier for workplace plans to offer lifetime income choices to help workers create a monthly, protected income stream in retirement.”

The IRI report concluded, “The retirement industry must work diligently to ensure that consumers are aware of the longevity, health care, and other risks they face in retirement, that they adequately protect themselves against those risks, and that they are educated about the solutions that can protect them.”

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