Ted Benna's Take on Secure Act and 2020

Also, the "persistent low interest rate environment is impacting how people saving for and living in retirement are planning to ensure their retirement needs are met," according to Dylan Huang, senior vice president and head of retail annuities at New York Life. "Most people have under-saved for retirement, which means that the need to stay in the market is critical."

Social Security

This topic sows worry among most experts. "What's happening is benefits are being paid out with taxes coming in or from the phantom trust fund," Benna says. He warns that a recession will affect Social Security because "it will accelerate retirements." That is, older people may lose their jobs and opt to take Social Security. "That ratchets up the benefits being paid out, and [at the same time with a recession] there is a drop off in taxes."

Steve Vernon, author and research scholar at the Stanford Center on Longevity, believes that because "Social Security is the foundation of most people's retirement," politicians have to make it sustainable, but "they aren't doing their duty, and it's not going to happen."

He does add that people should delay claiming Social Security benefits, using other savings as a bridge.

Annuities

Benna isn't "a big fan" of variable annuities but believes fixed income annuities work because "you get a guaranteed lifetime income." However, he says any annuities must come from "strong companies like New York Life" (and others) that know the market.

Huang believes indexed annuities or variable annuities with a guaranteed minimum accumulation benefit rider that can provide market upside and downside protection "will continue to gain popularity in the New Year."

Christine Benz, Morningstar's director of personal finance, agrees, but adds [with indexed annuities] "you also surrender a significant part of your upside in that typically you only earn the capital appreciation component of the equity market's returns. You don't earn your dividends or interest."

She notes that another product that will grow in importance as the population ages are hybrid long-term care products, adding that "it's typically a life insurance policy with a long-term care rider. The idea is it gives the buyer some optionality. One of the impediments to people purchasing pure long-term care insurance is some people feel reticent to pay into a policy for many years knowing they may not need it. A hybrid product gives you some flexibility. If you end up not needing long-term care, then it defaults to a death benefit that is there for your heirs."

Vernon has "mixed feelings about annuities. They have their place, but they're oversold. To me it makes no sense from a financial perspective to start Social Security early and buy an annuity. Any money you use to buy an annuity should be used to fund your own Social Security bridge loan payment because the increase in your SS benefit [if you wait] far exceeds the amount you could have bought with the same amount of money. It's almost financial malpractice for an advisor to sell somebody an annuity and encourage them to start Social Security early."

Ginger Szala is executive managing editor of Investment Advisor. She can be reached at [email protected].