After nearly a decade of the stock market seeming to only go up, individuals saving and investing for retirement have been lulled into complacency. As a result, retirement savers, particularly those nearing retirement, are neglecting to protect their future income stream and keeping more money in equities as they look to ride out this bull market.
Concerningly, retirement savers' ill-preparedness to weather the next market downturn appears to be on a collision course with a recession that could be just around the corner. And the recession may be closer than many retirement savers realize. Cautionary market signals flashed red in April as the Treasury yield curve continued to flatten — and could soon invert, a leading indicator of economic recessions, making these spreads some of the most closely watched by economists.
What happens when these two trends collide is predictable: Many investors will flee equities for the "safe harbors" of principal protection and investment income. But retirement savers that take the time to consider investing in annuities now will reap the benefits of income guarantees in all types of markets — downturns included.
In order to preserve the benefits of income guarantees for clients at today's levels, advisors must act now to position individuals for the market's next decade — and its inevitable downturn. There are many strategies and tactics advisors looking to position clients for this coming fundamental shift in the market can utilize to ensure they're prepared.
Match future fixed expenses to income generating strategies.
Advisors report 80% of their clients are concerned with maintaining their lifestyle in retirement, according to our 2017 Nationwide Retirement Institute advisor survey. While it's understandable that this is the top concern for clients, through proper financial planning, retirees can ensure they're able to afford and maintain their day-to-day lives. A key piece in this financial equation is preparing for both fixed and variable costs in retirement.
By utilizing an annuity, clients can cover fixed expenses and ensure they're able to maintain their current lifestyle, even in a market downturn. Annuities are uniquely suited to match retirement income with fixed costs, reducing the unknowns and risk for retirees, as well as making the planning process less daunting.
Advisors should also stress the importance of planning for future fixed expenses that may not be relevant — or even anticipated — today. For example, 30 years ago, few consumers were budgeting for monthly cell phone bills or subscription services like Amazon Prime. As new technologies and services are created, unanticipated expenses will inevitably arise over the coming decades. By leveraging an annuity, consumers can plan for future fixed costs that may not be on their radar today but will be prevalent tomorrow.
Eric Henderson is senior vice president of Nationwide's annuity and life insurance businesses. 
