Peak 65 Retirees Have a Big Problem. But You Can Help!

Written by: Tim Seifert, Senior Vice President and Head of Retirement Solutions Distribution for Lincoln Financial Distributors, Inc.

Peak 65 Retirees Have a Big Problem. But You Can Help!

As this slow-moving demographic wave crashes onto the shores of retirement over the next few years, many of them aren’t ready (financially or mentally). Here are three points to consider as you guide them.

We’ve been carefully studying this wave of retirees for decades — in particular, how they’ve been preparing for retirement and reacting to the many curveballs the market has thrown at them over the years.

Comprised of the tail end of the Baby Boomer generation, the “Peak 65” cohort includes more than 4.1 million Americans turning 65 from 2024 through 2027. In fact, over 11,200 people will turn 65 today, give or take a few — a substantial jump from the past decade.

Simply put, many of them are not prepared with sufficient protected lifetime income for retirement, and many more feel unprepared. With so many people affected, that’s a problem big enough to shake the foundations of retirement in America. So what can you do?

1. The more clients understand the market, the better they can invest with confidence, not fear.

Consider the financial turmoil this generation has seen since they came of age in the late 1970s.

  • Inflation, long considered “the silent killer” of portfolios, has come roaring back to levels reminiscent of the disco era.
  • The booms and busts of the market seem to feel bigger and more dramatic.
  • Proper diversification has become more difficult as stocks and bonds experience more correlation.
  • The “risk and burden” of understanding vast economic complexities to fund retirement has shifted to their shoulders: very few have a pension, at a time when lifetime income guarantees from the government are becoming increasingly stressed.

If your clients are anxious, they may be distracted from focusing on their long-term investment goals. But if you take the time to educate them in financial areas where they’re not as savvy, or they have distracting concerns, you can build their confidence. Our investment insights make this conversation easier and more productive.

2. You need to actively draw out and discuss their hidden financial anxieties

It’s worth methodically getting an investing pulse check every year. Even if you are checking in, clients may not feel heard. In fact, we’ve found some surprising gaps between what financial professionals think they have discussed with their clients, and what clients report has actually been discussed. The Alliance for Lifetime Income found that:

  • 98% of financial professionals believe they have discussed protected sources of income (pensions, Social Security, and annuities) with clients, but only 69% of clients report having this discussion.
  • 95% of financial professionals report discussing minimizing taxes, but only 64% of clients recall having this discussion.

Both sides might be right. If you have a good handle on whether your client has a pension or not, but haven’t drawn out new or ongoing concerns about protected income or taxes, chances are they are going to feel unheard.

There is also evidence that clients have legitimate concerns that are undervalued by the experts. For example:

  • 53% of the Peak 65 cohort are concerned about inflation, but only 40% of financial professionals are worried about its impact.
  • 28% of the cohort are anxious about the impact of political uncertainty, but only 9% of financial professionals share this sentiment.

History shows it doesn’t matter who is in the White House; gains can still be found. But for someone who isn’t a student of economic history, who is despairing over whether Choice A or B wins the presidency, it can feel like the end of the world. They need help stepping back and getting some historic perspective.

3. They need to understand all their options for protecting their hard-earned money so they can stay focused

In a recent Lincoln-supported study we found some interesting — and conflicting — data points. Investors ages 55 and over are troubled by some big concerns1:

  • 71% are worried that market volatility will impact retiring on time, and 72% worry that they won’t be able to live comfortably in retirement.
  • 75% are afraid inflation will upend their retirement plans, and 80% are concerned it will eat away at their ability to have a comfortable retirement.

But they don’t seem to have a good understanding of common strategies that will help protect against those concerns. We know that 76% of women, and 67% of men, say that protection is very important to their retirement plan. We further found that when all consumers are considered, only a third, roughly, have an understanding of how annuities function1:

  • Out of investors focused on income and cash flow, only 35% understand that annuities are an efficient investment choice to create income.
  • Out of investors whose top priority includes protecting their assets from losing value, only 33% understand that annuities are a good way to protect their money.
  • Out of investors seeking protection from market volatility, only 35% see annuities as a good investment choice to do so.
  • For investors who want protection from inflation, only 29% realize that annuities can help provide this security.

If investors work with a financial professional, their understanding of annuities jumps significantly. But there is still a concerning gap, that one of the most powerful all-weather protection strategies in the industry simply isn’t on the radar of a cohort that is desperate for its benefits.

Your clients want growth. And they want protection.

Why not give them both? Help them find the right balance by staying invested and reducing risk.

What better time to have these important conversations than Annuities Awareness Month?

Annuities aren’t right for everyone. But they offer a variety of features and benefits designed to provide opportunities for growth, income and protection in retirement.  Having some of these in-depth conversations on a regular basis is a good fit for any client. Our team would love to support you as you reach out to your clients, to ensure they are confident, have the portfolio protection they need, and are focused on their long-term income goals. You can contact your Lincoln representative at 877-533-0265.

To read other blog content like this, visit Lincoln's informed financial professional blog.

Important information:

Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives and/or insurance agents do not provide tax, accounting or legal advice. Please consult an independent professional as to any tax, accounting or legal statements made herein.

Annuities are long-term investment products that offer tax-deferred growth, access to a lifetime income stream, and death benefit protection. Annuities are subject to market fluctuation, investment risk, and possible loss of principal.

There is no additional tax-deferral benefit for an annuity contract purchased in an IRA or other tax-qualified plan.

1Lincoln Financial Group, Consumer Sentiment Tracker, 2024.

Related: Build More Efficient Portfolios With Growth in Up, Down and Flat Markets