We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Income Annuities As Part Of An Integrated Planning Approach

    May 18, 2015 by Linda Koco, linda.koco@innfeedback.com

    Some advisors are showing increased interest in using income annuities for a portion of their clients’ retirement income plans. But other advisors are wondering, just how does that work out?

    Wade Pfau suggests that using income annuities in an “integrated approach” that also includes whole life insurance and investments may yield higher income and greater legacy wealth than an investment strategy combined with term life.

    A PhD, CFA and well-known professor of retirement income at The American College for Financial Services, Wade proposed the use of an integrated approach in a white paper commissioned by OneAmerica.
    The integrated approach “can create a more efficient retirement strategy,” he contended, adding that the markets would have to perform “extremely well” to beat this approach.

    40 percent more income

    That greater efficiency translates into more retirement income and more legacy value, according to the research. How much more?

    One example Pfau cited involved a couple, each age 35. They have $65,000 in 401(k) savings and $15,000 available per year to invest for retirement (savings and insurance). Pfau ran Monte Carlo simulations to create a distribution of outcomes for the couple in three different scenarios.

    In this case, the integrated option provided 40 percent more income at age 65, and 228 percent more legacy wealth at age 100 than an investments-and-term-insurance option. These were median numbers, reflecting what Pfau said are more typical outcomes.

    The professor also ran simulations on an older couple, each age 50, with $625,000 in 401(k) savings and $32,000 set aside for savings and insurance. That produced similar median results. It found total income at age 65 was 45 percent greater for the integrated plan than for the investment-plus-term plan and that legacy wealth at age 100 was 451 percent greater.
    In terms of actual dollars, the following is an example from the younger couple’s median outcome. It assumes partial annuitization from a single premium income annuity (SPIA) written on a single life. It also assumes a 7.74 percent payout for an amount equaling the whole life death benefit at age 65.

    In this case, annuity income came to $57,122 across the distribution, Pfau wrote. A 3.5 percent withdrawal strategy applied to any remaining investment assets would generate additional income of $114 to $77,425. This would produce total retirement income at age 65 ranging from $57,236 to $134,547, with a median of $82,034, he said.

    Findings like this might interest younger people who are planning for both retirement and life insurance needs, he indicated, explaining that younger individuals “may view whole life insurance in a new light as a powerful retirement income planning tool.”

    As for middle-aged people, such as the 50-year-olds above, he made the point that age 50 is “not too late” to start implementing integrated planning techniques.

    Scenarios

    The three scenarios used in the research were:
    »Investments-and-term-life insurance: This scenario uses a term life policy to meet life insurance needs until retirement, and otherwise draws retirement income with systematic withdrawals from an investment portfolio.
    »Investments, joint and 100 percent survivor annuity and term life insurance: This scenario also uses term life insurance, but adds partial annuitization with a joint-life income annuity to provide income along with portfolio withdrawals from the remaining non-annuitized assets.
    »Investments, single life annuity and whole life insurance: This scenario is the highly efficient “integrated” plan. It maintains a permanent death benefit with whole life insurance, and uses a single-life income annuity along with systematic withdrawals from the remaining non-annuitized assets for retirement income.

    Retirement income planning is still a relatively new field, the professor allowed, noting there is a “rift” in the field about the best way to build a retirement income plan.

    His take is that, “for retirement income, we must step away from the notion that either investments or insurance alone will best serve retirees. More emphasis is needed on the basic forms of insurance products, and how they may behave as part of an integrated retirement income plan.”

    The research reinforces the importance of considering the full array of financial tools available for building a well-diversified retirement income portfolio, Nicolas E. Lance, vice president-retirement income strategies at OneAmerica, said in a statement. “Personal situations vary and there are many options for creating retirement income.”

    He described the integrated approach as “one strategy that takes advantage of investments, provides guarantees and leaves a legacy for future generations.”

    AnnuityNews Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.

    © Entire contents copyright 2015 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

    Originally Posted at InsuranceNewsNet on May 13, 2015 by Linda Koco, linda.koco@innfeedback.com.

    Categories: Industry Articles
    currency