Insurer Asks Investors to Consider Retirement’s 4 C’s

Allianz 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.




What participants believe will be the most significant cost they’ll face in retirement (“Cost of living”) tells investors that seniors spend 11.1% of their income on medical care—and that health insurance premiums between 1999 and 2011 rose 160%, compared with a 38% increase in the cost of consumer goods.

Under “Certainty,” the Allianz website says: “It’s important to have the certainly that you’ll enjoy the same standard of living—and that you won’t run out of money—no matter how long you live; 61% of those surveyed fear running out of money in retirement more than they fear death.” Allianz introduces at this point the idea of canceling out longevity and market risk with a guaranteed stream of income in an annuity—and then asks participants to think about:


  • Whether they are prepared for retirement;
  • What kind of a lifestyle and other goals they have for their retirement;
  • What age at they plan to retire; and
  • What concerns they have for their retirement.


Besides introducing investors to the idea of including annuities in their retirement portfolio, Allianz wants to inspire them to “seek the help of an adviser,” Libbe said. “You are going to be much more successful in retirement if an adviser is working with you.”

Allianz is also promoting the 4C’s concept among its sales team and plans to reintroduce the idea with a second white paper on the sequence of returns and stock market volatility, Libbe said.

The idea for the 4C’s came out of Bhojwani’s challenge to the marketing team to come up with as memorable and easy a way for investors to grasp retirement planning as DeBeer’s 4C’s for the diamond industry, Libbe said. “Gary Bhojwani was very passionate about wanting people to understand how they are ending up after the Great Recession” and what steps they could take to improve their retirement readiness, Libbe said. When Allianz executives sat down to consider the key components of retirement, many of the key words started with “C,” she said.