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Longevity and Retirement: Mitigating the Risks Maximizing the Rewards

Longevity and Retirement: Mitigating the Risks Maximizing the Rewards. Longevity and Retirement: Mitigating the Risks Maximizing the Rewards. NAGDCA 2006 Christopher Real, Marketing Director, MetLife. NAGDCA 2006 Christopher Real, Marketing Director. L0603FEU4(exp1208)MLIC-LD.

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Longevity and Retirement: Mitigating the Risks Maximizing the Rewards

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  1. Longevity and Retirement: Mitigating the Risks Maximizing the Rewards Longevity and Retirement: Mitigating the Risks Maximizing the Rewards NAGDCA 2006 Christopher Real, Marketing Director, MetLife NAGDCA 2006 Christopher Real, Marketing Director L0603FEU4(exp1208)MLIC-LD Metropolitan Life Insurance Company, NY, NY L0603FEU4(exp1208)MLIC-LD Metropolitan Life Insurance Company, NY, NY

  2. Mature Market Institute Longevity Demographics Retirement Preparation Planning for the Future Today’s Discussion

  3. MetLife Mature Market Institute MetLife’s comprehensive resource on aging, retirement, and long-term care for MetLife and its business partners. • Research & Polls • Education & Public Policy • Training • Consumer Information • www.maturemarketinstitute.com

  4. “Two Stones tickets, please, senior discount.” ©2001 The New Yorker Collection from cartoonbank.com. All Rights Reserved. L0408JHEC(0807)MLIC-LD

  5. The New Face Of Aging

  6. Longevity 5 Things to Think About

  7. 1 People are Living Longer L0408JHEC(0807)MLIC-LD

  8. Life Expectancy at Birth Source: Centers for Disease Control and Prevention, National Vital Statistics System and National Projections Program, U.S. Census Bureau 2000 L0408JHEC(0807)MLIC-LD

  9. 50% Chance of living beyond 25% Chance of living beyond Male (age 65) 85 92 50% Chance of living beyond 25% Chance of living beyond Female (age 65) 88 94 50% Chance of living beyond 25% Chance of living beyond At least one person has a: Couple (both age 65) 92 97 The Longer You Live… The Longer You Live Source:Transactions of the Society of Actuaries, Annuity 2000 Table for Males and Females L0408JHEC(0807)MLIC-LD

  10. 2 More People are Living Longer L0408JHEC(0807)MLIC-LD

  11. U.S. Population Millions Baby Boomers 5 15 25 35 45 55 65 75 85 95 100+ Age Source: MetLife Mature Market Institute Analysis Population Projections Program US Census Bureau, 2000

  12. 3 People Spend More Years in Retirement L0408JHEC(0807)MLIC-LD

  13. Longevity Factor and Retirement 18 years 65 83 28 years 55 L0408JHEC(0807)MLIC-LD

  14. The Changing Wealth Span 1930 5 15 25 65 70 85 Accumulation Stage Expenditure Stage 2000 35 55 65 95 5 25 Source: Neal Cutler, Ph.D., Presentation, Boomers as Consumers, Philadelphia, March, 1999 L0408JHEC(0807)MLIC-LD

  15. 4 People Haven’t Saved Enough to Last a Lifetime L0408JHEC(0807)MLIC-LD

  16. “If we take a late retirement and an early death, we’ll just squeak by.” L0408JHEC(0807)MLIC-LD

  17. Retirement Readiness Good News • The majority of workers say they and/or their spouse are currently saving for retirement (64%) • 24% of workers feel very confident about having enough money to retire comfortably while 44% are somewhat confident Source: The 2006 Retirement Confidence Survey Summary of Findings, EBRI

  18. Retirement ReadinessBad News Savings Rates are Low Excludes home value. Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc, 2006 Retirement Confidence Survey

  19. Only 4 in 10 believe an individual who reaches age 65 has a 50% chance of living beyond 85 Only 2 in 10 understand longevity as the greatest financial risk facing retirees People Underestimate Their Longevity Source: Retirement Income IQ, MetLife Mature Market Institute, 2003

  20. People are Increasingly Anxious About Retirement • Number of Boomers worried about retirement doubled • Half plan to continue working in retirement

  21. Retirees understand how much it takes! They Underestimate Their “Goal” What percentage of your pre-retirement income will be needed to live comfortably in retirement? Source: Greenwald/EBRI: 2005 Retirement Confidence Study

  22. They’re behind in reaching a “goal” that’s probably too low! They Aren’t on Track to Make Their Goal Source: MetLife Employee Benefits Trend Study, 2004

  23. A large percentage of pre-retirees (45%) and retirees (47%) have not estimated the annual rate of inflation over the next 10 years* They Don’t Account for Inflation Source: Charlton Consulting, 2003 *Source: The Silent Generation Speaks, MetLife Mature Market Institute, Mathew Greenwald & Associates, 2005

  24. Spending too much, too soon Retirees assume that withdrawing 7 - 10% of savings per year will last them through a lengthy retirement They are Bad at Math Source: Retirement Income IQ, MetLife Mature Market Institute, 2003

  25. 5 People are More Likely to Need Long-Term Care L0408JHEC(0807)MLIC-LD

  26. Aging and Disability Prevalence of Alzheimer’s Disease Disabilities over Age 65 Source: Survey of Income and Program Participation, U.S.Census Bureau, March 2001 Source: U.S. Dept. of Health & Human Services, July 2002

  27. “There are only four kinds of people in this world... Those who have been caregivers Those who currently are caregivers Those who will be caregivers Those who will need caregivers” Rosalynn Carter, 1997

  28. Long-Term Care is Costly To individuals: National Average Costs • Nursing Home: Semi-private room $64,240 annually • Assisted Living: $34,860 annually • Home Health Aide: $19.00 per hour AND The families who care for them Average over a lifetime $659,139 in lost wealth The MetLife Market Survey of Nursing Home & Home Care Costs, 2005 Source: MetLife Juggling Act Study, 1999

  29. The Approaching Storm Underestimate Longevity Savings Rates Low Decreasing DB Plans Few are Planning Elimination of Retiree Health Benefits Rising Cost of Long-Term Care Rising Cost of Health Care Uncertainty of Entitlements

  30. Braving the Storm

  31. Boomer Window of Opportunity • Not yet retired • Better educated • Healthier • Interested in second careers • Not as concerned with leaving an inheritance • Assets in homes • Open to advice and assistance

  32. Overcoming the Issues • It’s not only about accumulation, it’s about lifetimeincome • And it’s also about protecting that income

  33. How Can We Protect Retirement Income? • Life Insurance • Long-Term Care Insurance • Guaranteed Lifetime Income Products

  34. “Silents” Feel Comfortable About Their Future • Retirees who have both a pension and an annuity are three times more likely to say retirement is much better than they expected • Most retired “Silents” feel they are living well in retirement

  35. Retirement: What Does the Future Hold?

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