Retirement Income Questions? See A Planner, Speakers Say

The baby boomers are aging, they are living longer in retirement, they have retirement savings from their defined contribution plans to manage, and they must deal with shifting market returns, pointed out James S. Riepe, vice chairman of T. Rowe Price Group Inc., Baltimore.

Many do expect to have enough money to live in retirement, he allowed, but he said most people are not saving enough to do that. As a result, they face an “unprecedented era of self-insurance.”

Yet “60-year-olds are more active, vital, attractive and richer than we ever imagined,” said keynote speaker Ken Dychwald, founder and president of Age Wave, LLC, Emeryville, Calif., and author of two books on aging and the mature market. In fact, he said, many retirees are going back to work, volunteering, starting new businesses, going to school, providing regular care for grandchildren, and so on.

They will “transform retirement” and concepts of maturity, he said, calling the new lifestyle of adulthood “cyclic.” Now, instead of progressing from birth, marriage and parenthood to retirement and death, many see their retirement years as a time to reinvent themselves, he said.

Retirement is “about to get much more interesting,” Dychwald said. But how retirees will finance this is a concern.

Right now, he said, about 25 million baby boomers have less than $1,000 in savings; they are living on credit cards. And many are spending their 401(k) money, rather than rolling it over, when they leave an employer.

In short, “boomers dont save, they leak their 401(k)s, and they dont plan for their retirement,” he said. “We need a financial wake-up call.”

His suggestion? “The more complicated and exciting the path of adulthood becomes, the more people will need people like you to help them manage.”

But to serve this market effectively, he said, “your industry needs to be equally excellent in people as in products.” Focus on helping people have the financial freedom to live the lives they want to live in retirement, rather than on selling products, he said.

Richard M. Reilly, president and CEO of Allmerica Financial, Worcester, Mass., added some other suggestions for the variable annuity industry. “We should focus on making the investment necessary to drive our future,” he said. This would include upgrading archaic systems and addressing certain problems that consumers have with variable income annuities (like fluctuating payments, and little liquidity).

Furthermore, he said, VA insurers need to address the complexity issuesfor instance, by offering sales tracks that help producers understand and explain the product.

But even with technological improvements, retirement funding will be a challenge, predicted Jeffrey M. Green, first vice president and product manager-Estate & Trust Services for SalomonSmithBarney, New York City. “Technology doesnt make thing easier; it makes things more difficult,” he said.

For instance, he predicted that retirees wont be able to keep track of all the moving parts in their financial plans and products. Therefore, clients will need advice and expertise, he said. “Advice will rule the day.”

And that, Green said, “will be good for us all.”

Reproduced from National Underwriter Edition, June 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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