Here at Retirement Think Tank, we are clearly big proponents of annuities in general. From annuity education, to making sure annuities are sold correctly (suitable for each specific client), to attempting to bring some fun and entertainment to a somewhat dry and boring industry. For quite a few years, we have been predicting a huge increase in annuity sales in America. In fact, we did a video early in 2010 calling for an Annuity Perfect Storm. The perfect storm consisting of huge volatility in the stock market combined with approximately 10,000 baby boomers retiring every day for the next 10 years, combined with an awakening of retirees and baby boomers realizing that their 401k’s will never be able to contractually guarantee lifetime income.
This year (2012), we have witnessed numerous large 401k plans finally adopting annuities into their qualified programs. Just this week, Southwest Airlines announced they were introducing 3 annuities into their 401k. We anticipate this will be an ongoing trend with large 401k plans as more and more soon to be retirees start demanding lifetime income options in their qualified accounts.
2012 was also the year that the Obama administration actually introduced “New rules to bring annuities to 401(k)’s and IRA’s” where not only will 401(k) plans be forced to reveal their mysterious fees, but it will also encourage the same 401(k) plans to embrace bringing annuities into offerings. To say that annuities have some momentum is a huge understatement.
This week we came across a report by Celent called “North American Annuities, 2012: Market Trends and Technology Considerations” which contained a very exciting prediction – “Annuity Sales will Grow to $368 Billion by 2014”. Keep in mind, we are just a few months away from 2013 as I write this, so the $368 billion number is a large increase from where we are today. One of the main catalysts that the report predicts will help increase overall annuity sales is the introduction of new fixed indexed annuities.
Don’t think for a minute that we won’t we be reporting on this again over the next 2 years. Stay tuned for updates on exactly how accurate this report is. If any other annuity windfalls occur in the next 12 months, the $368 billion sales number could be conservative.