Retirement Needs for Boomers Opens New Opportunities for Insurers

A survey recently released by AIG SunAmerica and conducted by Harris Interactive shows that securing a significant source of retirement income guaranteed for life is a top financial goal for almost all boomers.   
  
Participants of the "America Speaks Out on Retirement: 2007 Investor Research Study" stated that guaranteed lifetime income, protection against investment losses, and sufficient income to meet rising healthcare costs are their most important financial planning objectives.   
  
Nearly 75 percent of boomers said they would be interested in an investment product that could meet these needs, and two-thirds said they would pay up to two percent of annual investment returns for a lifetime income guarantee.   
  
"Baby boomers have changed the retirement conversation in this country," observed Jana Waring Greer, president, AIG SunAmerica Retirement Markets. "They are no longer talking about building a retirement portfolio; they are asking for help in investing it, protecting it, managing it, and stretching it across the remainder of their lives. In short, they're asking for guaranteed lifetime income that can rise with—and even outpace—the cost of living.  
  
"Since there is only one industry that knows how to manage the risks inherent in that kind of guarantee, it creates a sweet spot for insurers that specialize in retirement savings," Greer continued.   
  
Two-thirds of all boomers said they would be interested in allocating a portion of their qualified plan into a variable annuity that offered the potential for stock market growth, downside protection and guaranteed lifetime income. "That's an enormous opportunity for the insurance industry," Greer said.   
  
Harris Interactive conducted the poll among both boomers (ages 45–60) and retirement-age adults (61 and over, referred to in the research results as "Matures"). The results reveal the growing recognition among most Americans in this age group, even those with substantial nest eggs, that increasing longevity, rising healthcare costs, and volatile investment markets could exhaust their financial assets during retirement unless they find an investment strategy to replace the pension income guarantees of previous generations.   
  
"Boomers see the difference between their parents' monthly pension checks and their own up-and-down portfolio results," Greer noted. "They see companies freezing pension plans. They continue to read about open-ended, unfunded liabilities of public pension and healthcare plans. And they are demanding guarantees."   
  
Greer said the answer for boomers' demands are the variable annuities offered by insurance companies. They provide a combination of investment options and insurance guarantees.   
  
Regardless of the size of their nest egg, both age groups surveyed—pre-retirees and those already retired—expressed strong interest in lifetime guarantees.   
  
"This research challenges conventional wisdom," Greer said. "Affluent investors are just as likely as those without a large financial cushion to look down a potential 30-year retirement path and feel vulnerable. And they're just as concerned about finding a solution."  
  
The "America Speaks Out on Retirement" survey was conducted online within the United States in early April. It surveyed 1,022 adults aged 45 and over, of whom 512 were 45–60 years of age and 510 were over the age 60. All were U.S. residents who had investable assets between $100,000 and $2 million, excluding 401(k) assets.