Products September 8, 2010

Vanguard Introduces Online Annuity Service

Vanguard has introduced a new Web-based service that enables individuals to compare income annuities from leading insurance companies.
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Vanguard Annuity Access, powered by Hueler Companies’ Income Solutions platform, is designed for individuals seeking a guaranteed stream of income in retirement to augment their investment holdings, workplace retirement plan, and Social Security benefits, according to a press release. Prospective purchasers can obtain customized quotes on a real-time basis and evaluate competitively priced, directly comparable contracts from multiple companies.  

Vanguard Annuity Access is designed to provide competitive payments to investors, resulting from the meaningful competition among insurance companies on the Income Solutions platform and from the institutional, or group-rate, pricing of the annuities offered, the announcement said. The quotes should also be competitive because of the low transaction fee of 2% of the annuity purchase amount.  

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The service will also offer access to fixed deferred annuities with fixed interest durations ranging from three to seven years. A fixed deferred annuity lets clients earn a fixed interest rate on their savings for a set number of years. Both the interest rate and principal are guaranteed by the insurance company that issues the annuity, Vanguard explained.  

“Traditionally, annuities have been viewed as complex products that were sold and not bought. Vanguard Annuity Access brings the tools and transparency to the annuity-buying process, enabling self-directed individuals interested in a ‘paycheck for life’ option to make an informed decision,” said Tim Buckley, managing director of Vanguard’s Retail Investor Group, in the announcement.  

 

Data & Research September 8, 2010

Boomers and Older Americans Aware of Retirement Crisis

Longer life spans, increased personal responsibility for retirement savings, and the recent market downturn can seriously impact a person’s retirement preparedness and most Americans in a recent study are aware of this.
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Allianz Life Insurance Company of North America’s survey of 3,257 U.S. adults ages 44 – 75 found 92% agree there is a retirement crisis in America. Among respondents in their late 40s, 97% agree there is a retirement crisis, while all respondents with lower income levels agree.  

The Allianz Reclaiming the Future Study found that among respondents ages 44 – 54, more than half (51%) say they feel unprepared for retirement, 57% worry that their nest egg will not be large enough in retirement, and 47% are afraid of not being able to cover even their basic living expenses in retirement.  

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Between 58% and 60% of all age groups report worrying about longevity. Sixty-one percent of respondents say they are more afraid of outliving their assets than they are of death.  

The study also indicated that the recent market downturn was a wake-up call for many Boomers and older Americans. Forty-six percent say that since the downturn, they’ve decided that protecting the security of their savings is “much more important now.”  

Sixty-nine percent of respondents say they would prefer a retirement savings product that is “guaranteed not to lose value.” Eighty percent would choose a product with a 4% return and a guarantee not to lose value over a product with an 8% return and no guarantee.  

In its Reclaiming the Future Study, Allianz identified five different financial personalities of respondents: 

  • Overwhelmed: 32% of respondents said they feel unprepared for retirement. This group expects to have to reduce their living expenses in retirement and they are counting on social security for retirement income. 
  • Iconic: 20% of respondents are confident their income will last through retirement. They have reduced some of their spending, and they have a handle on their retirement expenses. 
  • Resilient: 27% have planned ahead, and most are planning on investing, working longer, or supplementing social security with some other form of income. 
  • Distracted: 7% of respondents have seen their net worth drop significantly but have not changed their retirement plans or reevaluated their overall financial strategy. 
  • Savvy: 14% of respondents say they are living comfortably in retirement or will retire comfortably. They have large, diversified portfolios, are comfortable taking risks, and confident their income will last throughout their lives. 

 

The study report can be downloaded from https://www.allianzlife.com/MediaCenter/ReclaimingTheFuture.aspx.  

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