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I often have clients tell me, “‘I’m too old for an annuity” or “That sounds good, but I wish I would have known about this when I originally retired,” implying that an annuity is not a legitimate option for them now. Contrary to their belief, the older a person gets, the more justifiable an annuity becomes. At that point their concerns usually are:

• Making sure they don't run out of money due to longevity
• Safety and not being subject to market loss in turbulent times
• Passing on the remainder of their assets to beneficiaries
• Avoidance of probate

The key is to select the right type of annuity. At this stage in life, clients would be best served to look at a fixed annuity or fixed indexed annuity, and on a rare occasion, an immediate annuity.

Advisor and client need to be extremely cautious to ensure the client is not subjected to the unnecessary risks and fees of a variable annuity during and/or after their retirement years. The prospectus of a variable annuity is often too overwhelming for the client to fully understand, so it is just tossed in the trash.

Do you have clients that say similar things about annuities? How have you responded?

Average Age of Annuity Buyers: (According to Limra 2012)

Fixed:

25 percent (50 or under)
27 percent (50-59)
27 percent (60-69)
13 percent (70-79)
3 percent (80 or older)

Indexed:

17 percent (50 or under)
33 percent (50-59)
32 percent (60-69)
16 percent (70-79)
2 percent (80 or older)

Variable:

21 percent (50 or under)
34 percent (50-59)
34 percent (60-69)
11 percent (70-79)
0 percent (80 or older)