A new white paper from Allianz Life Insurance Company of North America (“Allianz Life”) and LIMRA, entitled “How the New Economy is Changing the Way Americans Save,” says that more Americans are abandoning the old formula for retirement and focusing on protecting principal and generating “income for life.”
According to the Census Bureau, by 2020 almost one-third of Americans will be nearing or in retirement, but most don’t have ready financial plans. The old formula for retirement was one-third social security, one-third corporate pension, and one-third investments, such as 401(k) plans.
Now, many pensions have disappeared, the future of social security is unclear, and stock market investments aren’t as reliable as once thought. As a result, in October 2008, 35 percent of affluent retirees said that a guaranteed income payment stream is the single most important factor when choosing a retirement solution, up from 23 percent just two months earlier.
“The ‘new normal’ for retirement balances liquidity, volatility and rate of return,” says Allianz Life President and CEO Gary C. Bhojwani, who co-authored the white paper with LIMRA President & CEO Robert A. Kerzner. “Today, Americans are looking more closely at guarantees and principal protection as important components of a solid retirement plan,” Bhojwani adds.