In fact, the number of people age 65 and
older will increase 79% between now and
2030, meaning another 75 million new
retirees -- or people who would love to
be retired -- will be looking for help
with retirement income and investing and
most are terrified they'll run out of
money long before they die.
Financial advisors charged with getting
all these boomers back on track and
hopefully headed toward a comfortable
retirement need to stop looking in the
rearview mirror and open their minds to
new investment strategies that defy the
conventional wisdom that's prevailed for
decades, according to Dave Paulsen,
chief sales officer at Transamerica
Capital Management.
"The retirement landscape is unlike
anything we've ever seen before, with
new challenges that are changing the way
retirees receive retirement income,"
Paulsen said.
Paulsen said financial professionals
need to appreciate that there is no
one-size-fits-all approach to any one
individual's retirement plan and
traditional methods that advisors have
relied on for years -- including the
so-called 4% rule or the "bucket"
approach to retirement planning -- need
to be augmented with diverse and more
creative tools and investment products
to help bolster investors' retirement
income for the long haul.
"This is especially important if you
consider the state of the equity markets
over the past decade," he said. "Most
clients can't afford another market
downturn."
As if the housing market implosion,
stock market volatility and high
unemployment and wage stagnation wasn't
enough, this bumper crop of retirees
also must contend with rapidly
escalating health care costs,
exacerbated by the fact that people are
living longer either alone or at an
assisted-living facility.
According to the U.S. Department of
Health and Human Services, the average long-term
care insurance premium
for someone between 65 and 69 years of
age is $2,500 a year. For anyone over
70, the average premium is more than
$3,000 a year. And for those who can't
qualify for long-term care insurance,
all of those long-term care fees have to
be paid in full out of pocket.
Paulsen said investors and advisors need
to bone up on new investment products,
especially the growing variety of variable
annuities, to help bridge the gap
between retirees' expenses and their
Social Security benefits.
"Variable annuities offer guaranteed
lifetime payout options, guaranteed
death benefit options and tax-deferred
treatment of earnings," he said.
"Variable annuities can play a
substantial role in a retirement income
strategy, whether it's used as a method
to supplement income for health care
costs, or even to fill the income gap
Social Security leaves behind."
This article originally appeared in Money
Management Executive, a SourceMedia
publication.
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