As the retirement landscape changes – including how people fund their retirements and have longer life expectancies – annuities can be valuable tools for supplementing income after retirement.

 

“A high percentage of employees are interested in lifetime income options in retirement, especially since most people don’t have the luxury of a pension plan anymore,” Paula Aven Gladych writes for Employee Benefit Adviser. “Most people are relying on their employer-sponsored retirement plan and Social Security to get them through retirement, and there isn’t a lot of information out there on how to turn accumulated wealth into an income stream in retirement.”

 

But at the same time, more annuity options than ever are available, which can provide brokers and advisors an opportunity to guide their clients to the best choices for employees. “If it’s been a while … since you last wrote a fixed annuity contract on a client, you would be understandably shocked at how much the process has changed over such a relatively short period of time,” writes Chris Bartolotta writes for lifehealthpro.com. Applications are longer – some as long as 80 pages – and more education than ever is required for advisors offering products like indexed annuities, Bartolotta writes.

 

Another important development in the annuities market: last year, the federal government ruled qualifying longevity annuity contracts “could be excluded from required minimum distribution calculations if they are held within a 401(k) or IRA,” Ben Mattlin writes for Financial Advisor Magazine. In addition, annuities should be considered when advisors consider how clients and their employees, particularly those in high tax brackets, might be affected by the Medicare taxes introduced as a part of the Patient Protection and Affordable Care Act, writes Janet Levaux for thinkadvisor.com. “Tax-deferred annuities … can help defer taxes to retirement, when income may be lower,” Levaux writes.

 

So what’s a broker to do? Treat annuities like other products they expect to grow in popularity, by learning as much as they can about the different options available. Then, that knowledge can be applied to add value for clients and their employees, in what’s looking like a growth industry. “Industry-wide annuity sales reached $229.4 billion in 2014, a 3.8 percent increase from $220.9 billion in 2013 and an 8.2 percent increase from $212 billion in 2012,” Daniel Williams writes for lifehealthpro.com.