June is annuity awareness month. How did this come about and why? In 2015, The Commonwealth of Massachusetts proclaimed June Annuity Awareness Month, to "educate consumers on annuity benefits, support them in considering annuities... and encourage them to seek professional advice for implementing annuities effectively in their income and legacy planning."
Why does the Commonwealth of Massachusetts want to raise awareness about annuities? Well, I would guess because the OLD rules of retirement are not working as well as they did and people nearing retirement need a new way to plan. Some would even say the old rules of retirement are broken. According to the National Institute of retirement security, an overwhelming 88% of Americans agree we have a retirement CRISIS on our hands1. Just 20-30 years ago many people nearing retirement could depend on the traditional three-legged retirement stool. The first leg off the stool is made up by Social Security. The second leg of the stool was comprised of company sponsored pensions. And the third leg - personal savings. Today, the new rules of retirement suggest that Social Security is in jeopardy of NOT being able to meet its original obligations, leaving the first leg of the aforementioned stool looking a bit wobbly. In fact, the SSA is now inserting the below text into the first page of every Social Security statement they send:
“Social Security is a compact between generations. Since 1935, America has kept the promise of security for its workers and their families. Now, however the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today’s younger workers are ready for retirement. Without changes, in 2033 the Social Security Trust Fund will be able to pay 77 cents for each dollar of scheduled benefits.”
Also, since the inception of 401k’s in 1978, many companies have done away with traditional pension plans. Will you have a pension? My guess is no. Today most people don’t have company pensions or defined benefit plans. Yet, there are still some people that work in the public sector who are still lucky enough to have a pension.
So what does this mean for you? Let's say you are 5 years from retirement. The government is now telling you that you may get less in Social Security and you don’t have a pension. At retirement you must rely solely on your personal savings, i.e. 401k, IRA, etc. Maybe you have used a 401k retirement calculator and the results are not good – showing that you will run out of money at some point. Many of you are asking “How much do I need to retire?” It’s scary and overwhelming.
Well, it does not have to be that way. With some guidance and changes that you can adapt now, you can create a plan that will give you guaranteed income for life. Kind of like creating your own pension – using the RIGHT KIND of annuity. This is why I'm so glad June is annuity awareness month!
2.Commonwealth of Massachusetts Proclamation of Annuity Awareness Month