America's retirement crisis is just starting to rear its ugly head. Realization is beginning to set in for consumers aged 55 and older that they have not saved enough to sustain their standard of living in retirement. In fact, with Peak 65 coming in 2024, many are lobbying Congress to substantially increase minimum Social Security retirement benefits as the current payouts are not sufficient. The day of financial reckoning for many older Americans reaching their 60s is coming. They don't have sufficient lifetime income to pay their bills.
On the other hand, a recent survey by The Alliance for Lifetime Income and CANNEX, "The Protected Retirement Income and Planning Study," found that younger individuals (ages 45-54) are beginning to plan ahead. They are concerned when it comes to their financial future, ranging from the declining prevalence of private sector pensions to how much they'll need to save for their retirements.
All of the above points to the need for better access to and availability of lifetime income solutions through direct-to-consumer platforms, financial professionals and insurance-only licensed agents. Can access and availability improve? Is our regulatory system doing all it can to promote access and ease of purchase for the financial solutions needed? In my opinion, the answer is no. Instead there is a confusing mix of regulatory initiatives currently in play.
In my experience I have found most all regulatory organizations to be under-resourced and fighting hard to keep up with technological and other innovations of the organizations they supervise. Many times, however, regulations are a roadblock to improving consumer value. Just look at the improvement in consumer health outcomes that has resulted from the pandemic-forced approval to use telemedicine.
Why is an annuity regulatory rethink needed? Here are some considerations:
1. Annual industry annuity sales at best increase by the rate of GDP growth rather than the population increase in the older demographic cohorts
Even though the US industry produces over $220 billion per year in new annuity sales it is not at all capturing a growing share of protected income needs. What are the reasons for this lack of market penetration? Is the current regulatory structure limiting sales?
2. Licensed insurance professionals focused on annuity sales are aging with the average age near 60 with little new blood joining the industry.
Will there be sufficient professionals to service the needs of an aging population? Should regulation be changed to facilitate technology delivery solutions?
3. New retirement legislative initiatives are being offered in Washington, but…
Many of the proposed solutions will help younger generations and not those in close sight of retirement.
Harry N. Stout has been the president of Fidelity & Guaranty Life, deputy chief executive of Old Mutual Financial Network, and managing director of Insurance Insight Group. He is also the author of 
