The income imperative: the role of fiduciaries in retirement planning

Financial Advisors will play a key role in securing the financial futures and retirement planning of Americans amid

Published By - knowledgeNile

Financial Advisors will play a key role in securing the financial futures and retirement planning of Americans amid the looming retirement crisis. As part of their transition to a fiduciary focus, it is imperative that advisors present their clients with increasing clarity about how to generate and manage income streams in retirement.

It is a well-known fact that Americans have become increasingly concerned about their financial futures; with good reason. A number of demographic, political and economic factors have combined to create an impending retirement crisis that could leave millions of individuals and families underfunded in their senior years.

Americans are living longer, extending the length of retirement by 20 to 30 years, and estimates suggest that millions of Americans are at risk of either outliving their savings or having to drastically downgrade their expectations of lifestyle in retirement.

The role of fiduciaries in retirement planning

According to the U.S. Labor Department: only 54 percent of American workers have an employer-provided retirement account. Meanwhile; most consumers do not believe Social Security alone will provide a sufficient income for retirement; causing alternative retirement solutions to be in high demand.

The diagnosis is correct—there is a problem; Americans may need timely and sound financial advice to ensure financial security in retirement.

However, the “cure” that is proposed is often incomplete and too heavily focused on how to make the most of investments in the accumulation phase. This accumulation focus fails to address the underlying reason that most Americans seek retirement advice: they want to ensure they will be able to structure distributions from their investments so they can cover their financial needs in retirement.

Annuities are ideally suited to mitigate the risk of consumers exhausting their income in retirement: in fact, more than half (52 percent) of the advisers interviewed in the IRI study believe that some of their clients who do not own annuities will run out of money during retirement. Therefore, it is imperative that advisors spend more time discussing the distribution phase of the retirement equation with their clients and position annuities as a product that can provide income that cannot be exhausted or outlived.

Annuities are uniquely positioned to offer protected monthly income for life when combined with an optional benefit, – bridging clients’ income gaps when social security and other savings are insufficient. This lifetime guarantee lets people live without worry: confident that their income stream will be there when they need it most.

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