What do you think is most important element upon a client’s retirement – income or assets? According to Nobel Laureate in Economics Robert Merton, income should be your client’s primary focus. This is because someone could have a lot of assets, but those assets may not produce any income.

Most of our clients have spent 30 to 40 years managing the family finances with two paychecks a month, but those paychecks stop at retirement. Retirees are then left to their 401(k) payout, savings and monthly social security checks to provide the income that is supposed to last the rest of their life. The client has to really time their portfolio adjustments perfectly to the market changes - to determine what to buy, what to sell, what to hold, which way interest rates are going, etc. - every two weeks to turn that lump sum in to the bi-weekly “paychecks” they are accustomed to receiving. Throughout these ups and downs of portfolio management, retirees need to be extremely careful because they don't have the opportunity to "re-fill the bucket" anymore with earnings from work if they make a mistake.


No wonder large portions of the populace are worried about having enough income to last. This is especially true because retirement forecasts show increasingly extended retirement lifetimes that could be as long as most people worked.

Advisers Offer the Solutions
Many studies have shown that retirees may likely achieve their best results by mixing fixed annuities and variable annuities with income guarantees in combination with their equity investments. This strategy works for your clients because fixed annuities will provide the highest guaranteed payout of income that can last the client’s and spouse’s lifetimes. Further, variable annuities with income guarantees may provide a hedge against inflation, while guaranteeing certain income benefits and death proceeds, even if the underlying equity subaccounts have decreased in value. These guarantees actually often allow a more aggressive posture on the equity portion of the portfolio because the retiree knows he or she can cover basic living expenses no matter what happens with equity markets.

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Get your Clients Started
As their adviser, the first step is to meet regularly with your clients and know their retirement and legacy goals. Then you can help them shape their financial planning. Most importantly, ensure that monthly bills are covered as the number one financial priority. Help your client determine how much money has to come into the house every month to pay bills, then allocate social security and annuity income to that number. Then, invest the rest in portfolios that reflect your client’s risk tolerance.

Working with each client to individually tailor their financial investments and portfolios will help them achieve their goals, and you yours.

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