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Ride the RILA wave

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If you saw sales of an annuity product double in a single year, you’d likely ask two big questions: “what are my peers doing?” And “how do I get in on that?”

Such is the case with registered index-linked annuities (RILA)s. According to LIMRA, RILA sales reached $41.1 billion in 2022, rising six percent from 2021 and hitting a new all-time high. Originally introduced in 2010, RILAs — also known as buffered annuities, structured annuities and variable indexed annuities — are riding a rising wave of popularity as they help clients meet their long-term financial goals.

Creating the groundswell is demand from consumers looking for an efficient way to manage portfolio risk. Start your search for prospects by looking at your Gen X clients.

Why the “Forgotten Generation” deserves attention

While often overshadowed by the baby boomers and millennials, Gen X represents a lower percentage of the population yet commands a high portion of wealth.

As a smaller and younger demographic, their collective wealth logically lags baby boomers. However, Federal Reserve data shows they’re catching up. Their share of household net worth recently surpassed their share of households. Plus, they’ve seen their wealth increase in recent years, with plenty of time still left on the earnings clock.

Age in 2021
Silent Generation
1945 and earlier
(Age 75+)
Baby Boomers
(Ages 57-75)
Gen X
(Ages 41-56)
(Ages 25-40)
Wealth % 15.15 52.18 27.63 5.02
Population % 7.60 21.80 19.90 22.00

Defining moments created demand

Gen X experienced the stock market highs of the 90s and were mid-career during the market crashes of 2001 and 2008. Their experience with both the highs and lows of the market, combined with today’s low rates and their time left to retirement, make RILAs a strong match for the Gen X client. “Gen Xers need a chance at higher growth to maximize their remaining years of saving. Plus, they want a level of protection to manage anxiety over the risk of loss,” says Chris Grady, EVP and Head of Retail Sales at Athene USA.  

RILAs rise to the challenge

RILAs were designed with specific features that help manage risk while providing greater growth potential than fixed income alternatives.

  • Mechanisms to manage risk. RILAs provide a measure of protection from loss due to market downturns.
  • Increase growth potential with index-linked performance. Money grows by earning interest credits based partly on the movement of an external stock market index. Cap and participation rates may limit the amount credited.
  • Defer tax payments on growth. Taxes are not paid on growth until money is withdrawn from the annuity.

Grady shares, “along with managing the risk of market downturns, RILAs also help manage the risk of inflation. People can put their money in options with zero risk of loss, but over time they lose purchasing power by not outpacing inflation.”

Take the plunge

Professor Wade D. Pfau, Ph.D. and retirement income planning expert, investigated how this new asset class addresses the growing impact of three key retirement risks. Access his exclusive report to discover how a RILA could help clients, especially Gen Xers close to retiring, build a resilient retirement income plan.  

Insights on Athene Connect. Tips, tools and resources to grow your business by helping clients retire with confidence.

Registered index-linked annuities have a risk of substantial loss of principal and related earnings. They are designed to be a long-term investment product used to help provide income for retirement and are not suitable as a short-term investment.