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Partnership Essentials: August 2018  

Lifetime income is the outcome:
Evaluating income planning capabilities

In the AIG Income Savvy Study, 61% of those surveyed indicated that their greatest concern when it comes to transitioning into retirement is outliving their retirement savings.1 For these concerned savers, the only difference between feeling ready and feeling wary may be a matter of retirement income planning. Many retirement plan service providers tout their commitment to driving outcomes, but aren’t clear as to how (or how well) they can provide guidance to plan participants with respect to income planning and withdrawal strategies. This poses a problem because in planning for retirement, income is the desired outcome—and that income needs to last a lifetime. As a consultant, you can have a positive impact for your plan sponsor clients by taking a problem-solving approach in this area.

The problem: Failing to plan is planning to fail

The problem is sobering. More than half (51%) of survey respondents—in this case, those aged 40 to 75—have an ad hoc withdrawal strategy for retirement income.1 This is likely because figuring out future income needs and withdrawal strategies requires navigating a great deal of uncertainty. Many plan participants lack the tools and resources to manage this uncertainty on their own, and simply aren’t aware of the solutions available.

Possible solutions: Replacing uncertainty with predictability

For predictable expenses that occur month after month, plan participants may benefit from predictable sources of income. As a leader in retirement plan services, we feel it’s essential to educate American workers about the power of having protected lifetime income for at least a part of their retirement portfolio. This would meet an important need, as 4 in 5 workers with a defined-contribution retirement plan are interested in guaranteed lifetime income options.2 Retirement plan providers can make a big difference by educating participants about their options and helping them make sense of which ones might be right for them.

Problem-solvers: Financial advisors who understand income planning

Retirement plan advisors can be part of the solution. The number one topic participants want to discuss with plan advisors is: “Whether I am on track for retirement.”3 Solving that riddle is dependent on the advisor’s ability to help estimate an individual’s future income needs and educate them about income strategies.

Employees of all income and asset levels could benefit from the help of appropriately licensed financial advisors, who are qualified to provide broad financial planning services. VALIC financial advisors meet or exceed industry standards, and with an average of 18 years of experience, they’ve built their careers around financial planning—including income planning. Equipped with our interactive retirement income planning solution, Retirement Pathfinder®, they can help participants build personalized retirement plans to fit their individual needs.

Envision the future

Encourage your clients to evaluate how providers like VALIC—offering advice from financial professionals who understand income planning, income solutions and income withdrawal strategies—may help participants convert today’s savings into future income. Together, we can help plan sponsors offer richer plan benefits, foster a happy workforce, facilitate timely transitions to retirement and offer their employees valuable services that extend beyond their working years.

Because when income is the outcome, other great results will follow.

Learn more about Retirement Pathfinder

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1 AIG Income Savvy Survey, 2017.
2 Methodology: The AIG Income Savvy Survey was conducted online within the United States by Dr. Michael Finke and Dr. Wade B. Pfau in November 2017 among 1,009 U.S. adults aged 40 to 75 who are currently employed and have at least $50,000 in retirement savings or non-qualified investments.
3 Employee Confidence Survey, Employee Benefits Research Institute, 2018.

VALIC parent company, American International Group, Inc. (AIG), is a founding member of the Board of Directors for the Alliance for Lifetime Income.

Together, we’re helping Americans address the risk of outliving their income, and educating them on the power of having protected lifetime income for at least a part of their retirement portfolio.

Learn more:
RetireYourRisk.org