Annuities: protection from the effects of dementia

By Lou Aarons

Delaware Valley Financial Group

Your prospects and clients are looking for the very thing annuities provide: peace of mind.

According to the Alzheimer’s Association, as of 2011, 43 percent of the U.S. population over the age of 85 has some form of Alzheimer’s disease. Those suffering from dementia often struggle mightily with seemingly simple tasks such as paying bills and grocery shopping. Yet as the baby boomers retire and begin their march to their 80s and beyond, the fundamental changes that have taken place in the retirement arena are forcing these folks into doing something much more complicated: managing their money.

When defined benefit plans died and 401(k)s were born, employees no longer had their retirement income planned for them; they had to do the planning themselves. The promise of a brighter retirement was tempered by the realities of affording to raise a family and the inevitable mistakes that people make. They failed to join the plan, to contribute as much as they could (should?), to allocate their investments sensibly and to re-balance their investments as they aged. And all that happened when they were not cognitively challenged.

When they retired, they marched off with a big pile of money and a 40-year history of taking care of it themselves. At the very point in time that they need specific income planning, they are stuck in money management mode. And, almost inevitably, at some point while managing their money they will develop some level of dementia. We need to do more than help these people when impairment hits, we need to help them protect themselves while they know exactly what they are doing. Annuities can be the solution.

Utilize annuities to help your pre-retiree and recently retired clients establish their own defined benefit pension plan. Take away the stress of needing to actively manage the most important money they have, the money that they live on. Eliminate the possibility that your client might make a catastrophic financial mistake when they can least afford it. If the income needs to start right away or leaving a legacy to the next generation doesn’t matter, a SPIA will provide the highest level of income guaranteed for life. Income riders on fixed or fixed indexed annuities can provide guaranteed growth rates and a guaranteed future lifetime income stream. Why take any chances with retirement income?

In Allianz’s 2010 study, “Reclaiming the Future,” 63 percent of those surveyed indicated they feared outliving their money more then they feared dying. We have the tools to eliminate that fear. That power brings the responsibility to get the word out and educate as many people as we can about these solutions. Your prospects and clients are looking for the very thing annuities provide: peace of mind. It’s up to you to deliver!