Dylan Huang (Photo: New York Life)
An executive at New York Life Insurance Company has an idea for this weekâs National Retirement Planning Week campaign: Consumer demand for income annuities is still out there.
Dylan Huang, head of retail annuities at New York Life, says sales of the products have been growing, slowly, in spite of the effects of prolonged low interest rates on the amount of income the contracts can generate.
âWe believe income annuities are the ultimate way to secure retirement, as it provides a guaranteed paycheck for life, while hedging against the numerous financial risks retirees confront in the decumulation phase,â Huang said in a written commentary.
An income annuity contract can convert all or part of a consumerâs assetsÂ into a stream of income, immediately, or at a designated future date.
Sales of one type of income annuity, single-premium immediate annuities (SPIAs), had a compound annual sales growth rate of 3.2% over the past five years, according to LIMRA Secure Retirement Institute data cited by Huang.
Growth in income annuity sales slowed in 2017, but thatâs probably because of the uncertainty surrounding the U.S. Department of Laborâs fiduciary rule, not because of any softnessÂ in the underlying demand for retirement income solutions, Huang said.
An income annuity may have a relatively low rate of return. But it can help a retiree avoid many formidable risks, includingÂ withdrawal risk, longevity risk, sequence-of-returns risk, and uncertainty about Social Security, Huang said.
Interest rates have come up some in recent months, and thatâs improving the payout guarantees, Huang said.
â ReadÂ Letâs Make Kids Part of the Financial Literacy Conversation,Â on ThinkAdvisor.