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Reclaiming the Future

Reclaiming the Future. Your hope ahead. Meet Bob. Early 50s Divorced with two grown children Recently lost his job at the high school Working two jobs to make ends meet Significant credit card debt Feels unprepared for retirement Not sure if or when he’ll be able to retire

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Reclaiming the Future

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  1. Reclaiming the Future • Your hope ahead

  2. Meet Bob • Early 50s • Divorced with two grown children • Recently lost his job at the high school • Working two jobs to make ends meet • Significant credit card debt • Feels unprepared for retirement • Not sure if or when he’ll be able to retire • Says he is in “survival” mode This scenario is for illustrative purposes only and does not represent an actual Allianz client.

  3. The Allianz Reclaiming the Future Study • Larson Research and Strategy Consulting, Inc. and DSS Research fielded a nationwide online survey for Allianz among 3,257 U.S. adults, age 44 to 75. • We surveyed 1,642 U.S. households becauseboomers are facing one of the most pronounced retirement income challenges in history. • Life expectancy is increasing; people are living longer in retirement. • And reliable sources of income from the past, such as defined benefit plans and Social Security, are becoming less and less reliable.

  4. Agenda

  5. You’re not alone • Americans fear outliving their retirement assets

  6. You have concerns • “Overwhelmed” financial personalities like Bob represent 32% of the boomers surveyed. • 61% of boomers said they fear outliving their assets more than they fear death. • 57% said they are worried that their nest egg may not be large enough for retirement needs. • 47% fear they will not be able to cover their basic living expenses in retirement. The Allianz Reclaiming the FutureStudy, 2010.

  7. You’re not alone • Almost a third (31%) describe themselves as somewhat to not at all clear in terms of exactly what their expenses will be in retirement. • This number jumps to 57% among those in their late 40s. • Even 36% of the affluent are uncertain what they will need for their retirement. The Allianz Reclaiming the FutureStudy, 2010.

  8. Retirement portfolios underestimated • Estimates of retirement portfolios are off by a factor of nearly three times too small. The median income boomers say they will need is around $60k. Assuming a standard 4% draw, this would require a$1.5 million portfolio. The median size of portfolio boomers say they will need is around $540k. The Allianz Reclaiming the FutureStudy, 2010.

  9. The changing face of retirement • Learning from The Allianz Reclaiming the Future Study

  10. Changes to defined benefit plans 2 1 2 2 1 Notes, February 2009, Vol. 30, No. 2, www.ebri.org. 2 “The Financial Crisis and Private Defined Benefit Plans,” Center for Retirement Research at Boston College, November 2008.

  11. Social Security is no longer reliable Ratio of workers to beneficiaries 1950: 16.5 workers to … 1 beneficiary 1 beneficiary 3.3 workers to … 2005: 1 beneficiary 2025: 2.3 workers to … "The 2009 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds," May 12, 2009.

  12. Economic downturns affect our retirement • The economic downturn was a big wake-up call. Experience during downturn • Saw my net worth drop significantly in a very short period (53%) • Home value dropped substantially (43%) • Realized I was much less in control of financial destiny than I thought (41%) • Real possibility of outliving assets (28%) • Can’t rely on 401(k)/pension plan as primary retirement assets (27%) The Allianz Reclaiming the FutureStudy, 2010.

  13. Retirement strategies often change • For some, the downturn made them feel their retirement plans went “out the window.” • 20% of boomers in their late 50s realized their calculations for how much money they’d have at retirement were now totally wrong. • 18% of affluent felt like their whole retirement plan went “out the window.” The Allianz Reclaiming the FutureStudy, 2010.

  14. Americans are seeking guaranteed retirement solutions • Annuities are gaining relevance and appeal

  15. Guaranteed retirement solutions • Survey respondents told us that: • Safety of retirement nest egg is desired over high returns. • Guarantees are more attractive than high returns. The Allianz Reclaiming the FutureStudy, 2010.

  16. What’s your ideal financial product? • Most important features people want in an “ideal” financial product • Top 5 responses: • The ability to support a stable, predictable retirement standard of living • Guaranteed income stream for life • Guaranteed not to lose value • Protect against market downside • Don’t need to worry or think about what it does The Allianz Reclaiming the Future Study, 2010.

  17. Why not retirement income insurance? • Financial risks transferred away 1 2001 CSO Table, www.actuary.org/life/cso_0702.asp. Accessed September 2010. 2 Percentage is calculated from U.S. Fire Administration, “Residential Structure Fires,” www.usfa.dhs.gov/statistics/national/residential.shtm and American Housing Survey for the United States: 2007. Accessed September 2010. 3 Percentage is calculated from U.S. Department of Transportation National Highway Traffic Safety Administration, “2008 Traffic Safety Annual Assessment – Highlights,” Traffic Safety Facts, June 2009 and Fatality Analysis Reporting System (FARS) Encyclopedia 2008, www-fars.nhtsa.dot.gov/Main/index.aspx. Accessed September 2010.

  18. Annuities as retirement insurance • Annuities are seen as similar to retirement insurance. • Like insurance for part of your retirement nest egg (45%) • All you have to do is leave it alone and it will do the work (38%) • Great way to create an individual retirement vehicle (36%) • Balances out other risky investments (31%) • Great way to save money (26%) • Some even see it now as more attractive than a 401(k) (8%) Note: Annuities are insurance products and not pensions. They are not subject to the protections of ERISA. The Allianz Reclaiming the Future Study, 2010.

  19. Many annuity owners like their product Like annuities very much. 74% Very happy with their annuity. 76% Q80: What is your general opinion of annuity products, where “1” means I don’t like them at all and “6” means “I like them a lot”? Q97: How happy are you with your annuity, where “1” means “very unhappy” and “6” means “very happy”? The Allianz Reclaiming the Future Study, 2010. 19

  20. Top reasons boomers like annuities • Reasons why they like their annuity • Safe, long-term product with modest returns (57%) • Great way to supplement Social Security or other retirement income (56%) • Way to get tax-deferred interest on part of nest egg (56%) • Can be protected from stock market declines (50%) • Allows earned interest based on movement of market (36%) • Opportunity for earned interest without market volatility (29%) The Allianz Reclaiming the FutureStudy, 2010.

  21. Today’s annuities are not yesterday’s annuities • However, little time has been spent on learning about annuities. Occasionally have heard something but have not researched them Once in a while have looked at and updated knowledge Not really looked into them since formulating opinion about them Kept fully knowledgeable about the product The Allianz Reclaiming the FutureStudy, 2010.

  22. You are not alone. • However, your situation is unique. The Allianz Reclaiming the FutureStudy, 2010.

  23. What is your financial personality? • The study revealed five unique segments

  24. Five financial personality segments Overwhelmed 32% “Financially speaking, I am pretty much in survival mode.” Iconic 20% “I’ve worked hard and invested wisely for my retirement security and I am enjoying it.” Resilient 27% “Deep down, I realized things would never be the same in terms of financial security.” Distracted 7% “I am happy to live in the moment with a full house and a full life.” Savvy 14% “I watch the markets and manage my investments.” The Allianz Reclaiming the FutureStudy, 2010.

  25. Five financial personality segments • Overwhelmed – 32% • Unprepared for retirement, you are feeling overwhelmed. You expect to have to reduce your living expenses in retirement, and you’re counting on Social Security for retirement income. You feel like you are in “survival mode.” The Allianz Reclaiming the FutureStudy, 2010.

  26. Five financial personality segments • Iconic – 20% • You are confident your income will last through retirement. You feel that you have prepared well for the future. You may have reduced some of your spending, but you have a handle on your retirement expenses. You believe in the “American Dream.” The Allianz Reclaiming the FutureStudy, 2010.

  27. Five financial personality segments • Resilient – 27% • You exhibit a “take charge” attitude. You’ve planned ahead and value your independence, but you are planning on investing, working longer, or supplementing your Social Security with some other form of income. You are concerned about outliving your income. The Allianz Reclaiming the FutureStudy, 2010.

  28. Five financial personality segments • Distracted – 7% • You have seen your net worth drop significantly. However, you haven’t changed your retirement plans or reevaluated your overall financial strategy. You are worried that your savings will not be adequate for retirement, but you don’t have a plan for growing those savings. The Allianz Reclaiming the Future Study, 2010.

  29. Five financial personality segments • Savvy – 14% • You are either living comfortably in retirement or will retire comfortably. You are financially independent, comfortable taking risks, and confident that your income will last throughout your life. You have a large, diversified portfolio and few financial concerns. The Allianz Reclaiming the Future Study, 2010.

  30. Your hope ahead • Next steps toward your retirement future

  31. Your hope ahead. • Talk to your financial professional. • Read the Allianz Reclaiming the Future consumer brochure (ENT-1067). • Take the financial personality questionnaire (ENT-1039). • Ask if insured retirement solutions are right for you. ENT-1067 ENT-1039

  32. Summary

  33. Allianz Life Insurance Company of North America (Allianz) • Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. For variable products, guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions. • Not FDIC insured • May lose value • No bank or credit guarantee • Not a deposit Not insured by any federal government agency or NCUA/NCUSIF • Products are issued by Allianz Life Insurance Company of North America. Variable annuities are distributed by Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. • Product and feature availability may vary by state.

  34. Thank you • Any questions?

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