Annuity issuers may now be looking for new ways to expand their books of business, and it could be wise to target the youngest generation of adults now, as the vast majority have no retirement savings opportunities available to them at the present time.
Today, about seven in 10 millennials say that they do not have any retirement savings or plans to undertake these efforts, according to a new survey from GfK and MainStreet.com. This trend comes even as many experts say that Social Security likely won't hold up long enough — at least in its present form — to be a reliable income source for people currently in their 20s and 30s once they reach their full retirement ages. In fact, though 70 percent of these young adults aren't currently setting themselves up for a healthy financial life once they retire, about two-thirds still say they plan to do so at 65 nonetheless.
Meanwhile, when it comes to planning for retirement, most adults of any age say they believe accounts issued by their employers are incredibly important, the report said. In all, more than 60 percent of baby boomers and millennials say that their 401(k) or other employer-sponsored plans will be vital to their retirement income.
As should be expected, boomers are far more likely than millennials to have life insurance policies, as 70 percent say they currently have some sort of coverage in this regard, the report said. Most often, the decision to take it on was spurred by the birth of a child.
This information could make annuities and life insurance policies extremely attractive to younger consumers as they age. Those in their 20s and 30s may be getting close to the point at which they settle down and starting families of their own, which may necessitate they start thinking more about the benefits that these plans can provide them going forward, particularly as the economy continues to improve and they have more funds to contribute to these issues.
The problem of young people planning to pull out of the workforce in line with current retirement norms is that most will live far longer than their parents or grandparents, and thus will need far larger amounts of money to cover their needs. If people do start living well past current average life expectancies, that whole working thing looks a lot different. If you retire at 65 and you still have decades left in your life, you're not going to have nearly enough money to thrive later in life.