IRI Pyramid Illustrates the Balanced Diet of Retirement Savings

The Insured Retirement Institute (IRI) said its new Retirement Pyramid can help financial advisers explain what clients need to have “a healthy and vital financial future.”

IRI based the pyramid off of the well-known food pyramid from the U.S. Department of Agriculture. The goal is to help investors visualize how to balance financial priorities. While no two people will have exactly the same retirement plan, using a financial fitness pyramid can give someone an idea of how to balance your investments, according to IRI.

The organization of insurers puts guaranteed income streams, including pensions, Social Security, and annuities at the base of its pyramid. One could argue that this is a little bit like a dairy farmer organization putting dairy products at the base of the pyramid, but IRI asserted annuities will be important vehicles to ensure that retirees don’t outlive their savings, especially for younger investors who feel uncertain about Social Security.

The next level of the pyramid consists of longer-term investments, such as traditional 401(k)s,  individual retirement accounts (IRAs), real estate holdings, and some annuities. IRI pointed out that diversified 401(k)s and IRAs provide some stability against the frequent fluctuations that can affect a company’s single stock.

IRI put insurance products—such as life insurance, long-term care insurance, medical coverage, and Medicare—close to the top of the pyramid, noting that they shouldn’t make up the bulk of retirements assets, but investors should consider a good mixture. At the very peak of the pyramid, IRI put CDs, mutual funds, stocks, and bonds. The organization said advisers might want to dilute some of those more volatile investments with something more stable, such as IRAs, and more guaranteed income streams, such as annuities, but “a smattering of these in your retirement plan is a wise choice.”

The pyramid was released as part of National Retirement Planning Week, taking place April 12 to 15. More information about the pyramid (including a printable version) and National Retirement Planning Week is available at