The pandemic has given us all historical pause while causing widespread change, especially across the workforce.
A 2020 economic study uncovered information that suggests many older workers chose early retirement because of the pandemic, with 60% of people who left the labor force through early April saying they were retired, which is 7% higher than reported in January before the pandemic took hold in the U.S.
Experts also expect that the pandemic will affect the timing of retirement for many older workers, whether voluntarily or because of job elimination or "unavoidable health risk."
Since how long someone works is one of the primary factors affecting retirement security, an uncertain timeline means more clients are considering their retirement plans and how to best prepare. When creating a retirement portfolio, annuities are a worthwhile option for guaranteed income.
While many in the industry may be well-versed in the numerous benefits annuities can provide, for those who are just beginning to learn about them, or for advisors speaking with clients about annuities for the first time, it's helpful to start by discussing what makes them a viable option, for whom and when.
These answers can all provide context into why they're a necessary part of a comprehensive retirement portfolio.
Understanding Retirement Goals
While the future has always been uncertain, that's even more true now. As data suggests, people are more seriously considering early retirement, or whether to put off retirement longer, as economic benefits increase after the age of 65. Because of this, pre-retirees and retirees are thinking through how they want to live in retirement and what is actually achievable.
When building a retirement plan, oftentimes people first look at how much money they have and ask how far it will get them; however, doing the opposite can be more helpful. Instead, by first asking how much they need in retirement, it will provide insight into how to save for it.
For example, a client can determine the annual income they would like to have in retirement, and then determine how much they need to save by when in order to reach that.
When putting together a comprehensive retirement income plan, clients should consider their age, timeline to retirement, how much they have saved, how much they need based on their timeline and their retirement goals.
Advisors can help guide them through this evaluation process, and also look at existing expenses compared to desired retirement lifestyle goals. With these answers, advisors can help clients determine a strategy and how to diversify a portfolio.
Securing a Portion of the Portfolio
A retiree's goal is likely to reduce the risk of losing critical savings during retirement while also boosting income potential. Having annuities as a portion of a portfolio can help achieve these goals. When putting together an investment plan, diversification is a worthy strategy.
Retirement income can benefit from a comprehensive portfolio across various types of investments. Helping clients see that annuities are a great option for those looking to build and protect their assets can ensure they have predictable returns as part of their portfolio.
John Williams is the regional sales director, individual annuities at 
