Getting The Message

A few weeks back I had the happy experience of moderating a CEO panel discussion at LIMRA’s annual meeting in Orlando.

The panelists were a knowledgeable and distinguished crew–John F. Barrett, chairman, president and CEO of Western & Southern Financial Group; John D. Johns, chairman, president and CEO of Protective Life Insurance Company; and Thomas J. McInerney, CEO of ING U.S. Financial Services.

One of the questions I raised is something that’s been bothering me for quite a while now, particularly with the increasing volume of industry talk about taking lifetime income through annuity and insurance products. That question was that many people have saved only a minimal amount for retirement–say $25,000 to $50,000–so how is that small amount possibly going to translate into lifetime income for them?

I thought Tom McInerney’s answer was refreshingly frank and straightforward. Basically, he said, it’s too late for those people and they’re going to have to manage the best they can. But the industry has to continue encouraging and helping younger people to seriously save for retirement.

I’ve often expressed dismay at what survey after survey shows is a lack of financial preparedness among a broad swath of the American public for shouldering the responsibility for retirement. Fortunately, the noise factor has gotten much louder around this message.

Part of this has to do with sinking expectations–especially among those in Generation X and younger–about whether Social Security will be there for them and in what degree.

Many financial services companies’ ad campaigns also have started to get people to begin acknowledging an uncomfortable reality.

So, I think the situation has improved, with many people starting to at least think about socking money away for their later years.

This also gives me some hope that those folks who have only accumulated $25,000 or so may indeed be the last ‘lost generation’ when it comes to retirement income.

Part of the increasing recognition among many that they may have too little to retire on shows up in surveys where pre-retirees say they will continue working past 65. Many of these people tell the pollsters that they want to stay active, connected, stimulated, etc. But the truth is they’re probably going to need that money just to manage on a day-to-day basis.

I also find it a good sign that more companies in the life insurance business are starting to turn their attention to income distribution after having been preoccupied with asset accumulation for the past few decades. This shift in focus reinforces the message of lifetime income and how you need to provide for it by yourself.

But that doesn’t mean the business can forget the accumulation side of the equation. There are millions of younger consumers who are looking at a retirement 20 to 30 to 40 years in the future. They need to start saving now, so why not in products and programs produced by life insurers?

Going forward, the industry’s task is going to be a bit harder than it was in the single-message (accumulation only) past. But looking on the bright side, two messages are better than one.

Steve Piontek

Editor-in-Chief

I find it a good sign that more companies in the life insurance business are starting to turn their attention to income distribution after having been preoccupied with asset accumulation for the past few decades. This shift in focus reinforces the message of lifetime income.”