Talk With Older Boomers Now About Income Planning, Experts Say

“Thats scary!” Greenwald says. “At best, most people will be financially stretched.”

Compounding matters is the fact that many people will live 20 or more years in retirement, according to Rick Carey, managing director-professional services at VARDS/Info-One, Roswell, Ga. Many people realize that, he says, but “most dont know what their current assets will look like (in terms of income) once they retire, or how inflation will erode its value.”

Another reason is that consumers have tremendous need for income planning assistance–a need that advisors and providers can meet, suggests Jim Sholder, a principal of The Diversified Services Group Inc., a Wayne, Pa., consulting firm that tracks demographic trends.

For example, pre-retirees surveyed by DSG expressed a high level of discomfort about how they will manage in retirement, says Solder. In one survey, 39% said they “dont know” how they will manage paying for unexpected events that may happen when they are retired.

Currently, he adds, many people are uninformed about their retirement needs. In 2000, for example, a DSG survey of annuity owners age 60 and up found that only 23% of the polled group expressed concern about outliving their assets–even though people now live so much longer than they used to.

Whats more, adds Solder, of that group, “41% said they did not know how to deal with” outliving their assets.

Moldenhauer of Buffalo recommends that advisors talk with boomer clients about these issues. “Often, the broker needs to bring up the subject of income and retirement planning,” she says. “You have to translate for the client what the future might hold if they dont plan.”

Dont use retirement as a ploy to get people to buy, she stresses. But do “help clients get in touch with what they are already feeling, so they can use their heads to do the planning now” when they still have time.

Income annuities have the potential of serving this markets needs in a highly efficient way, says Carey. “But many income annuity players have not yet cracked the code on consumer education, broker education and product design.” To help turn that around, Carey and Greenwald recently formed the VARDS/Greenwald Strategy Service, a boutique provider of research, analysis, consulting and other services in this area.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 28, 2003. Copyright 2003 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.