Grow Your Business

The New ‘Gold Rush’

By Tom Foster

The California Gold Rush lured hundreds of thousands of fortune seekers to the “Golden State” in the mid-1800s and sparked a new wave of prosperity. The new arrivals – called “49ers,” often used metal pans to sift for gold in rivers and streams, later digging tunnels and mines.

Today, there’s a new group of fortune-seekers who have managed to amass small fortunes: America’s retirees who hold nearly $20 trillion or 49 percent of all investable assets in the United States, according to the LIMRA Secure Retirement Institute1. The report, “10 Facts Advisors Need to Know About Retirees,” underscores the importance of retirees getting professional planning help as they look to make their savings last for as long as possible.

Advisors are helpful in providing pre-retirees’ with a realistic view of retirement, shaping their expectations and planning accordingly. Otherwise, LIMRA reports, retirees may be in for some unpleasant surprises:

· Six in 10 single retired women spend more than expected on housing;

· 30 percent of retired women and 20 percent of retired men say their basic living expenses are higher than expected;

· Four in 10 retirees are spending more than anticipated on health and long-term care costs.

With realistic and professional planning, retirees can prepare for what life may be like once they stop working 9-to-5 and potentially enjoy a sense of financial security. LIMRA points out that retirees tend to feel more secure when they have a formal retirement income plan and annuity in place.

A formal plan should take into consideration all sources of income and how retirees’ assets can be positioned for long-term growth as their expenses may be impacted by inflation, potential healthcare issues and, eventually, long-term care needs. Without taking these variables into account, the retirement income plan is really no plan at all.

While LIMRA touts annuities as enhancing security, what retirees really need is a guaranteed source of income to cover their basic expenses. That guaranteed income stream may come from many sources, including Social Security, a pension, an annuity or a combination.

According to LIMRA’s findings, retirement-income planning may be a “win-win” for both retirees and their advisors:

· Half of affluent and high-net-worth clients with a formal retirement income plan consolidate 90 percent of their assets with their advisors. Less than half of retirees without a plan do so.

· Half of single retired women clients have consolidated 90 percent or more of their assets with their advisors, twice the rate of single-men clients.

· The annuity ownership rate is nearly 70 percent higher for households with a formal retirement income plan than those without a formal plan.

Unfortunately, many advisors are not taking advantage of the opportunities they have with existing clients. Two-thirds of retirees with an advisor don’t have formal retirement income plans, LIMRA reports, including more than half of affluent and high-net-worth clients.

Advisors can help retirees pan for gold by providing retirement income-planning guidance. Every client who is a pre-retiree or retiree should be asked to meet and review their retirement income needs.

In many instances, the client may require a “gap analysis” to determine future income needs by reviewing and projecting both expenses as well as income sources in retirement. Advisors are likely to find that many clients may not have a realistic picture of life in retirement and, ultimately, welcome a level set.

Retirement may be a source of golden moments for many retirees but advisors will perform a valuable service by getting as many clients as possible to pause, reflect and recalibrate their plans, if necessary. Otherwise, clients who have unrealistic expectations for retirement may ultimately be panning for “fool’s gold.”


E. Thomas Foster Jr. is head of strategic relationships for retirement plans for Massachusetts Mutual Life Insurance Co. (MassMutual).



1 10 Facts Advisors Need to Know About Retirees, LIMRA Secure Retirement Institute, =