As the baby boomers leave work, research suggests that guaranteed income, rollovers, and retirement income planning are going to be the three biggest areas of opportunity.
The LIMRA Secure Retirement Institute has compiled its latest data, market projections, and research on the retirement income market in its Retirement Income Reference Book. In a recent podcast, LIMRA AVP and the book’s author Jafor Iqbal identified what he believes will be three significant growth areas for the industry and advisors.
- Guaranteed lifetime income solutions: Iqbal notes that more than 40% of pre-retirees are interested in converting some of their assets into a lifetime income stream. In the United States, the market for converting pre-retiree assets into future guaranteed income is estimated to be $575 billion.
- Rollover market: 25% of retirees say that a discussion of retirement income with an advisor before they retire is a strong motivator to roll money out of a workplace pension plan and into an individual account, although the US Department of Labor has proposed regulations that could dampen this market's potential.
- Retirement Income Planning: LIMRA's research reveals that more than 4 in 10 pre-retirees are not confident about their retirement security and are worried about cuts to government plans, health care costs, and inflation. Those who do meet with an advisor are almost twice as likely to have figured out how long their assets will last, determined the health care coverage they’ll need, and formulated a plan to generate income in retirement.
LIMRA points out that clients who have a formal retirement plan tend to give advisors a larger share of their portfolio; 55% of high net worth investors with a formal plan have entrusted more than 75% of their portfolios to advisors compared to 38% of assets for those without a plan.