Data & Research December 2, 2009

More Retiree Households in Retirement Income ‘Drawdown’

Almost half of all financial assets held by households age 65 and older can now be considered in retirement income “drawdown” mode, according to a new research report.

Reported by

A news release said that the report by consultants Chris Brown and Laura Varas found that $4.3 trillion, or 48% of the $9 trillion held by households age 65 and older, is being used to draw 4% or more of income. The announcement said the 4% represented “a commonly recognized hurdle above which cautious and deliberate income-taking strategies are warranted to ensure long-term sustainability.”

The news announcement said the current picture represents a major shift in recent years, as the portion of retiree assets in retirement income “drawdown” was only 20% in 2006.

A main driver of the increase comes from an affluent segment of retirees—those with $1 million to $2 million in assets—who are taking income at an annual rate of 4% to 6% of their investment assets, including returns.

“The market downturn means that more affluent retirees find themselves interested in retirement income strategies, bringing their assets into what we define as the retirement income market,” said Varas. For example, a retiree who had a pre-downturn $1.2 million dollar portfolio and was comfortably generating $42,000 of annual income, or 3.5%, now needs to take 4.2% of income from their reduced portfolio of about $1,000,000 to maintain their living standard.

According to the announcement, the study found that certain investor groups still have the ability to generate assets and that they will need wealth management help. Brown and Varas have argued that mid-career investors can represent the most lucrative target market.

“Mid-career investors were hard-hit by the market downturn, but the earning power of this group means they have tremendous potential for significant wealth accumulation,” said Brown “Furthermore, mid-career investors are seeking financial advice and often leveraging technology to acquire information, creating opportunities for financial services firms to cost-effectively meet their needs.”

The news release said the report quantifies investable assets and financial product ownership for the entire U.S. market, and segments investor assets into six age and eight wealth categories, and 48 mutually exclusive groups.

“Portrait of U.S. Household Financial Wealth: Sizing, Segmentation, Product Ownership and Household Profiles” is available here. 

Products December 2, 2009

myStockOptions.com Expands Year-End Planning Guidance

myStockOptions.com has expanded its year-end planning guidance for those who receive stock options, restricted stock, and other types of equity compensation.

Reported by

Available free to all registered users, a new article on myStockOptions.com, “In Their Own Words: Financial Advisors On Strategies For Stock Options And Company Stock Holdings At Year-End 2009 And Beyond” presents firsthand planning insight and expertise from financial advisers across the United States on what they are deploying now to save taxes for clients and better position them as the market recovery continues, according to a press release.

In addition, myStockOptions.com has expanded its Financial Planning: Year-End section to provide educational content, including:

  • Stockbrokers’ Secrets (Part 3): Year-End Planning For NQSOs, Restricted Stock, And RSUs by W.E.B. Bantling and Michael Beriss;
  • Year-End Strategies For Restricted Stock: Ideas To Consider In 2009 by Bruce Brumberg;
  • Ten Ideas For Year-End Tax Planning With Stock Options And Company Stock;
  • How Tax Rate Changes Impact Stock Grant Strategies (Parts 1, 2, and 3) by Stanley Trotta and Bob Gordon; and
  • Stockbrokers’ Secrets (Part 7): Year-End Planning For ISOs by W.E.B. Bantling and Michael Beriss.

The announcement said questions answered in the Financial Planning: Year-End section of the Web site include:

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

  • What are year-end strategies for stock options, stock appreciation rights, and restricted stock?
  • Should the likelihood of tax-rate increases affect year-end strategies?
  • How do employees harvest capital losses against capital gains from company stock holdings?
  • Are there strategies for using capital-loss carry-forwards from prior years?
  • What risks are posed by the wash sale rule?
  • What year-end strategies can help to minimize alternative minimum tax with incentive stock options?
  • How do tax-law changes in 2008 and 2009, including refundable AMT credits and stimulus rebates, affect year-end planning?
  • How can employees save taxes on company stock by making gifts and donations, including those to private foundations or grantor-retained annuity trusts?

«