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Building confidence into
retirement portfolios

Most Americans worry about having enough income in retirement. How can you help your clients feel more confident about the future, right now?1

As advisors, we help clients create plans to support their retirement lifestyles – whether that means having enough income to keep up with core expenses or enough to fund a second home. If we do our jobs well, this plan may look fairly tidy, with a balance of risk and reward, an investment time horizon, and an income plan aligned to expected expenses.

Yet in truth, these financial plans are based on assumptions we make about a range of factors: How much market growth can we expect? Will interest rates follow a predictable curve? Will tax laws remain the same? Exactly how long will retirement last?

Clients’ tough questions

Today’s clients bring a level of skepticism not seen in previous generations. They know from watching and reading the news, and from talking to their family and friends, that assumptions can and should be questioned.

As savvy clients will tell you, retirements are lasting longer than ever: A 65-year-old couple has a 73% chance that one spouse will live to age 90 and a 47% chance that one spouse will live to 95.2  Longer retirements mean more pressure on a portfolio to generate income over an extended horizon and keep up with inflation.

Yet each client has a unique comfort level with risk. Do you know how much reliable income your clients need in their retirement plan? More importantly, do your clients know how much income their portfolios are designed to generate each year?

A confidence checklist

To help clients feel more confident about their retirement plans, help them answer the following questions:

  • How does my portfolio capture potential market growth as I approach retirement, while still providing some downside protection? To harness potential market growth and keep up with costs and inflation over a longer retirement, consider the value of a variable annuity.
  • Will I be able to enjoy my lifestyle in retirement? As clients push through the final stretch of saving for retirement, they often worry about making the transition away from paychecks. Help them feel confident with a strong, diversified income plan  to support their retirement lifestyle.
  • How does my portfolio hedge against market downturns? Many clients still feel the sting of 2008 and worry the market’s movements could impact their retirement outlook. In fact, almost half of Americans think they’re likely to run out of money in retirement.3 Yet staying invested can be an important part of meeting retirement goals. Help clients consider the value of a known source of income with more growth potential than cash or bonds.

Confidence by the numbers

Have a deeper conversation with clients about their retirement confidence: Contact your Lincoln representative to try out our new Portfolio Confidence Calculator. This easy-to-use tool lets you explore how adding a source of dependable, guaranteed income can increase portfolio confidence rates. And don’t forget to follow us on LinkedIn and Twitter for regular insights and tips on income planning conversations.

Variable annuities are long-term investment products that offer a lifetime income stream, access to leading investment managers, options for guaranteed growth and income (available for an additional charge), and death benefit protection.
 

To decide if a variable annuity is right for you, consider that its value will fluctuate; it’s subject to investment risk and possible loss of principal; and there are costs associated such as mortality and expense, administrative and advisory fees. 
 

All guarantees, including those for optional features, are subject to the claims-paying ability of the issuer.

1Lincoln Financial Group and Hanover Research, Inc., "The Longevity Opportunity: Planning for longer lives as a family,” 2015. http://newsroom.lfg.com/wealth-protection-expertise 
2Society of Actuaries Longevity Illustrator, based on 2010 Social Security mortality tables applied to the MP-2015 SOA rates. April 11, 2017. 
3Lincoln Financial Group and Hanover Research, Inc., "The Longevity Opportunity: Planning for longer lives as a family,” 2015. http://newsroom.lfg.com/wealth-protection-expertise

Investors are advised to consider the investment objectives, risks, and charges and expenses of the variable annuity and its underlying investment options carefully before investing. The applicable prospectuses for the variable annuity and its underlying investment options contain this and other important information. Please call 8888682583 for free prospectuses. Read them carefully before investing or sending money. Products and features are subject to state availability.

-Chris

ABOUT THE AUTHOR

Chris Price

For more than 22 years, Christopher H. Price, JD, LLM, CLU®, ChFC®, AVP, Advanced Sales, Lincoln Financial Distributors, has helped advisors and their clients accumulate, distribute and transfer annuity assets by using a holistic approach. In 1983, he began his career as a trust officer with Sovran Bank (now Bank of America). Chris moved into financial planning, and followed that by managing an insurance agency that served some of the wealthiest families in the country. In 1994, Chris joined Delaware Investments, formerly a member of Lincoln Financial Group, where he was responsible for the product management of Delaware mutual funds and eventually Lincoln variable annuities. From 2000 to 2004, Chris used his expertise to help financial advisors and their clients with advanced case issues. In 2005, he transitioned to the Lincoln Advanced Sales team. Chris holds a BA in history from Vassar College, and law and master’s degrees from the Marshall-Wythe School of Law at the College of William & Mary.

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