“How much can I spend?”
This question lies at the heart of so many conversations between a retiree and their adviser. Although not explicitly stated, this simple question ties in to so many other related concerns – Can I spend enough to be comfortable? Will I run out of money? What are my options if my health deteriorates? What about bequests?
All these questions boil down to one thing – a craving for certainty. While this is understandable from a retiree perspective, the key challenge for the financial advice industry is how much certainty can we provide in answering these questions, and how do we manage expectations?
With many changes taking place in the retirement products space and the baby boomer cohort starting to retire in greater numbers, it is an opportune time to consider how annuities may form part of a solution to address the issues many face in retirement.