June 29, 2012
Life Insurance Company of North America created a planning tool to give
investors and advisers a “framework for a retirement income strategy.” ---
The tool asks investors to consider four main aspects of retirement:
Clarity about their retirement future; comfort of living in retirement; cost of
living, particularly in light of myriad types of inflation; and certainty of
retirement income through various types of annuities
Allianz Life’s tips provide a more thorough, personal
approach for investors and advisers than other retirement investing educational
tools the firm has developed in the past, Katie Libbe, Allianz Life vice
president of consumer insights, told PLANADVISER.
“The 4C’s is special because it brings everything together
in the five to ten years transition phase [preceding retirement],” Libbe said.
“We have done a lot of good work as an organization to educate advisers on
tax-efficient strategies, Social Security drawdown, asset allocation in the
accumulation phase and getting alpha off of investors’ portfolios. The 4Cs takes
all of these concepts and strategies down to a consumer level—and reminds the
adviser that all of these smart and wonderful approaches are about the person
and what that person needs in retirement.”
Allianz is promoting the 4C’s as a feature at the top of its
homepage along with a white paper by Gary C. Bhojwani, chairman of Allianz Life
Insurance Company of North America. Essentially a reality check for investors,
4C’s asks about their expectations in retirement—and tells them how realistic
those expectations might be. The first question on clarity, for instance, asks
participants how much less they will be able to spend in retirement. Most
people, Allianz tells investors, expect to spend 20% less in retirement. In
reality, people earning $26,000 a year are only able to cut their expenditures
by 10% in retirement, according to Allianz, while those earning $104,000
annually can get by on an average 14% curtailment in expenditures.
The tool goes on—in the “Comfort” part of the
equation—to inform investors that 76% of the population would prefer a 4%
guaranteed return in retirement to an 8% potential return with market risk.