The campaign features collateral
pieces addressing these key points in addition to a dedicated, public-facing website. The site, which will
be refreshed monthly through March, provides links to a range of resources,
presentations and strategy-supporting material from industry experts and
organizations.
January’s theme is “Does It Pay to
Delay Social Security?” The site features a marketing flyer and presentation demonstrating
how delaying Social Security benefits can create more income in the long term.
In addition to a higher monthly
benefit, delaying Social Security can provide tax advantages by deferring or reducing taxation on those
benefits. Other advantages include inflation protection, which is built into
the Social Security program and mitigates one of the biggest risks faced by
retirees. There is also a spousal advantage, since delaying benefits could
potentially lock in a higher lifetime benefit for the surviving spouse.
The timing of a client’s Social
Security start date can have a significant impact on his or her retirement
income planning, said Rich LaVoice, Symetra executive vice president, retirement
sales and distribution.
“We developed planning tools and
identified resources to help advisers assist their clients with this important
decision,” LaVoice said.
“Have Your Retirement … and Income,
Too,” February’s theme, will outline a strategy for clients to replicate their
Social Security income from ages 62 to 70 through a period-certain single
premium immediate annuity (SPIA).
“Ready. Set. Delay.” is the theme
for March. Symetra will sponsor a webinar for advisers of selected partner
firms entitled, “Savvy Social Security Planning for Boomers: What Advisors Need
to Know to Maximize Clients’ Retirement Benefits” and presented by Social
Security expert Elaine Floyd of Horsesmouth.com.
Symetra Life Insurance Company is a
subsidiary of Symetra Financial Corporation in Bellevue, Washington.
Workers today are less likely than their parents or
grandparents to keep up the standard of living from their working years in
retirement, research found.
The AARP study, “What Are the Retirement Prospects of
Middle-Class Americans?,” gives a snapshot of the retirement prospects of
workers age 25 to 54, particularly the middle class, using research from the
Urban Institute.
Based on the Urban Institute’s Dynamic Simulation of
Income Model, the study’s authors, Barbara Butrica and Mikki Waid, project that
workers today are less likely than their parents or grandparents to enjoy the
living standards of their working years when they retire. Much of the projected
decline is expected because health care costs are rising faster than wages.
Employee
contributions to workplace health insurance and retirement plans have reduced
take-home pay. Skyrocketing health care costs and college tuitions have further
strained family budgets. The recession and ongoing financial crisis, which
eliminated millions of jobs and wiped out trillions of dollars in household
wealth, have tightened the squeeze on middle-class families and cast a shadow
on the future retirement prospects of today’s workers.
The study gives the following statistics about the
incomes of future retirees:
Future
retirees are predicted to have only slightly more retirement income than
today’s retirees. Median retirement income is projected to be $34,500 (in 2012
dollars) for future retirees, a 20% increase from current retirees.
Medical
expenses will wipe out the small retirement income gains for future retirees. When
out-of-pocket medical expenses are taken into account, the median retirement
income of future retirees (at age 70), net of health expenses, is expected to
be about $27,000—the same as that of current retirees.
(Cont’d…)
Social
Security will be the main source of retirement income for future retirees at
all income levels. Social Security will account for 51% of per capita household
income for future middle-income retirees—69.2% for low-income workers and 35.4%
for high-income workers. Social Security will be especially important as a
backstop for the 30% of middle-income workers who are projected to be
downwardly mobile as low-income retirees—Social Security will represent 81.6%
of retirement income for this group.
Continuing
to work will be a key way to maintain security in retirement. Among
middle-income workers who achieve high-income status in retirement, 64% are
projected to be working at age 70, and 38% will have working spouses, adding
$29,500 to their incomes (37% of total income) through their earnings.
Retirement
income gaps are projected to narrow over time among racial and ethnic groups. Compared
with the incomes of current retirees, the retirement incomes of the youngest
cohort (age 25 to 34) are projected to increase by 95% among non-Hispanic
blacks, 202% among Hispanics, and 86% among Asians/Native Americans, compared with
only 44% among non-Hispanic whites.
The
recent recession will negatively affect older cohorts of current workers. Among
45- to 54-year-olds in the middle-income category, college graduates are expected
to have 19% less income at age 70 than current retirees, because they have
fewer years before retirement to regain their losses from the recession and to
benefit from wage growth.
The ability to meet basic needs in retirement
was one focus of the study, which projected that declines in the poverty rate
among retirees will be wiped out by increased health care costs.
(Cont’d…)
The
poverty rate, as measured by this study, is projected to decline, from 9.7%
among current retirees, to 3.4% among middle-income workers when they retire.
However, after taking medical costs into account, the poverty rate will remain
virtually unchanged—16.8% among current retirees and 16.4% among middle-income
workers when they retire. (The study defines medical expenses as medical
out-of-pocket costs.)
Medical expenses will take an increasing
share of retirement incomes. Currently they average $2,800 a year, or 8% of
income. The study projects medical costs for future retirees will jump to $5,600 per
person, or 15% of income.
The ability to maintain a current standard of
living in retirement was examined by the study, which found that future
retirees are less likely than current retirees to be able do so. The
median replacement rates (the ratio of per capita household income at age 70 to
average per capita shared earnings between ages 25 and 70) is 80% for current
retirees, compared with 73% for future retirees.
The
Urban Institute uses statistical analyses to project various measures of the
future retirement prospects of workers ages 25 to 54 in 2012, with a particular
focus on middle-class workers. The model compares the retirement prospects of
current workers (future retirees) to current retirees and compares the
prospects of various subgroups of future retirees by age cohort, income level,
educational attainment, race/ethnicity, and gender/marital status.
“What
Are the Retirement Prospects of Middle-Class Americans?” is part of the Middle
Class Security Project, an initiative of the AARP Public Policy
Institute. The study can be downloaded here.