Solutions for a low-interest rate environment-Allianz
Life
Income riders
Just
five years ago, the 10-year Treasury was around 5.0%. Today, it hovers around
1.5%. In January this year, the Fed announced that economic conditions “are
likely to warrant exceptionally low levels for the federal funds rate at least
through late 2014.”
Today’s
low interest rate environment creates additional challenges for retirees. The
prospect that rates may stay low through 2014 has been challenging for clients
looking for sustainable income in retirement. Clients who are faced with the
possibility of having less income than they expected generally have just three
options:
- Reduce
their lifestyle and
attempt to live on the income they can currently produce
- Increase
their risk tolerance and
attempt to generate more assets by taking on more risk
- Spend
more of the principal of their savings and hope to not run out of
money
For
clients who can’t afford to reduce their lifestyle, and are not comfortable
increasing their risk, the guaranteed income benefits (may come as additional
cost riders) that we offer on our fixed index annuities can help protect
clients from running out of income, by providing lifetime income and the
potential for income increases following each year their allocations earn
interest.
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