The Advisory Career

Give Clients The Retirement They Want

An assured income, Risk protection & Personal dignity

by Tony O’Kussick, CLU

Mr. O’Kussick, CLU, is Director of Internal Sales Support & Operations at First American Insurance Underwriters, Inc., of Needham, Mass., a wholesale life insurance, annuities, long-term care and disability income agency. He began his life insurance career in 1993, and resides in Brookline, Mass. Contact him at 800-444-8715 or

Whether crystal clear or fuzzy, most Americans have a mental picture of their retirement. Then, the reality of what’s going to happen sets in: they will be taking money out instead of putting it in their retirement accounts.

It hits them that their retirement assets will start going down and it’s not likely that they will be adding more. As expected, disturbing questions go through their minds:

  • How long will my income last? How much can I take out? How long will I live?
  • What happens if I have serious health problems or have to go into a nursing home?

They don’t want to lose what they’ve saved for retirement, particularly when they’re afraid they won’t have enough to last as long as they live. Many see this as a fate worse than death, including nearly a quarter of those interviewed in a Wells Fargo survey. An Allianz study indicated that 77% of those in their late 40s felt the same way.

Since the average balance in the 401(k) accounts of those 55 and older is $150,300, according to Fidelity and Vanguard, it’s easy to understand the fear of asset loss. There’s also the worry of being a burden on other family members and the cost of nursing home care, currently $10,000 to $12,000 a month in Massachusetts, for example. Based on these numbers, a one-year nursing home stay exhausts the average person’s 401(k) account.

No Crystal Ball

The retirement planning story is also challenging for advisors, particularly when they’re involved in helping clients accumulate retirement assets. Lacking a crystal ball to predict a client’s future or the impact of such variables as longevity and health is a formidable task to illustrate.

The retirement years aren’t a straight line. The earlier ones may be quite different from the later ones

This is why breaking down retirement planning into a few categories can help:

An assured stream of income

According to a recent LIMRA study, 75% of pre-retirees say their top concern is having a guaranteed, regular income. Most people want to know they have enough money for the rest of their lives.

One way to do this is setting up a guaranteed annuity contract. They can be structured for two types of income stream strategies:

  1. Income now
    An Immediate Annuity provides retirees a monthly lifetime income stream just like a pension or social security payments. These products can also be set up so any unused principal is left for the beneficiaries.
  2. Income later
    Other annuity products can provide an income stream at a later date. Deferred Income Annuities and Indexed Annuities, with living benefit riders, offer pre-retirees peace of mind. Set up today, they can provide a guaranteed lifetime income stream when a client is ready to retire. They ensure that nothing bad happens to the retirement nest egg in the last few years before retirement.

Risk protection

The fear of loss can be overwhelming, which is why life, auto, homeowners and health insurance policies are a hedge against disaster and give “peace of mind.” But what’s often overlooked in retirement is coverage for nursing home and home health care.

It also explains why one insurance carrier reports that 40% of their permanent life policies include their LTC rider. If needed, it is an effective defense against the possibility of severe asset drain resulting from nursing home or in-home care costs.

Maintaining dignity

The retirement years aren’t a straight line. The earlier ones may be quite different from the later ones, which is when clients need more assistance and must rely on others for help. This is when having adequate resources available, whether money or insurance, helps preserve dignity. Long-term care coverage is a good example.

Once an advisor discusses these issues with a client, the next steps are to set priorities and come up with a plan. Such a process serves both client and advisor.