Retirement Products Need To Adapt To Boomers Needs, Experts Say
Retirement is the new, big opportunity in the financial services industry, and insurance companies are well positioned to supply what is expected to be the larger-than-ever demand for such products. This idea was suggested more than once at a recent seminar held by Ernst&Young, New York.
Shaun Matthews, chief marketing officer of ING U.S. Financial Services, said this is true because insurance is the only industry with a regulatory structure that allows guarantees around income, so that a carrier can assure consumers a guaranteed income stream in retirement.
This is “great news,” for insurance companies, he said, because annuities are much more flexible than they have been in the past, allowing for a combination of products rather than one product. So, a consumer interested in an annuity would not have to put all of her assets into that product. Rather, she could put a portion of her assets into an annuity and invest the rest in other products.
“It creates more certainty you wont outlive your income,” Matthews said.
And this is key to the group of people redefining what retirement is, said psychologist and gerontologist Ken Dychtwald, who is the founder of Age Wave.
Baby boomers have never followed in the footsteps of the generation that came before them, referred to as the “greatest generation,” he said. So, in order to remain competitive, financial institutions cannot continue selling the same retirement products that the parents of boomers bought. They need to create new products that fit the lifestyle choices of boomers, he said.
While older adults typically viewed life in three phases–youth, work, then a short retirement before death–boomers will likely go through these phases repeatedly in their lifetime and even at the same time. They will likely study, marry and work, then go back to school and start a new career or work part-time and possibly remarry, Dychtwald said.
Boomers tend to see their lives as a fluid journey and dont view retirement as a target date for ending their working lives, he said.
Financial services institutions that do not want to miss a trend should look at how boomers want to live in retirement and create products that will aid in achieving the desired lifestyle, Dychtwald said.