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Retirement, as Americans have come to know it, is a fairly modern phenomenon. Before the 1900s people typically worked until they died. And since the average life expectancy for a man at the turn of the century was only 48 years old, "dying with your boots on" wasn’t all that uncommon.
Social Security played a big role in reinventing retirement when it was introduced back in 1935. It artificially linked the age of retirement to 65, giving people something to aim for. The bad news for folks back then was the average life expectancy was 62. Today it’s 77.1
The Customized Retirement Income ModelSM
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Single Premium Immediate Annuity (SPIA) |
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Deferred Fixed Annuity |
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Equity Indexed Annuity (EIA) |
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Variable Annuity. Mutual Fund or Wrap Account |
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Variable Annuity. Mutual Fund or Wrap Account (VA) |
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Variable Annuity. Mutual Fund or Wrap Account |
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Not only are people spending a greater proportion of their lives in retirement — 20, 30 or even 40 years — they’re much more likely to have the means to self-finance this extended period of leisure. Today’s Americans enjoy a higher standard of living, now equal to eight times the income of Americans living a century ago.2
Indeed, millions of Americans have stepped up to the investment plate. It’s estimated that 7.6 million baby boomers are preparing to enter retirement, which means $15 trillion will be moving from asset accumulation to income distribution.3
Sound intriguing? Saving for retirement is one thing, but how can you help retirees make their income last as long as their retirement, and keep up with inflation? The Customized Retirement Income ModelTM (CRI) isn’t a product, it’s a money-management strategy designed to help deliver inflation-adjusted income that lasts a lifetime.
Over the past 30 years inflation climbed an average of 4.6 percent a year,4 which means you need $3.65 in today’s dollars to buy what a $1 bought you in 1975.5 If your clients are going to make their retirement nest egg last they need to have a plan that balances safety with growth.
I’ve Got a Nest Egg, Now What?
As money managers, we tend to think of ourselves as accumulation experts, measuring our success based on the growth of the portfolio. What we sometimes forget is that as people near retirement, they tend to care more about the new ROI — "reliability of income" rather than "return on investment."
Between 1984 and 2003 the S&P 500 grew by 12.98 percent. During this same time period — the greatest bull market in our nation’s history — the average investor made a scant 3.51 percent.6 That’s because investors are notoriously fickle, holding their mutual fund positions an average of only two years. They make emotionally based decisions rooted in greed and fear, chasing performance when times are good and fleeing investments when the market sours.
CRI provides clients with an easy-to-understand but highly effective asset allocation model that divides the money into six investment "segments." The first segment is used to buy a five-year single premium income annuity. The other five "segments" hold chunks of money in progressively more aggressive investments ranging from fixed and immediate annuities to mutual funds. Based on historical market performance, the model has an 83 percent probability of achieving an average rate of return of 7.07 percent over a 25-year period.7
When the first income annuity expires, money from the second segment is used to purchase a new income annuity, and so on. Assuming the return on each of the investments continues to grow at the expected rates, at the end of the 25-year period in this model a client who began with $1 million could hypothetically draw $1.94 million in income and end with a balance of $1 million.8
CRI provides you with a complete marketing package with prospecting tools, client seminars and presentations, brochures and personalized illustrations, as well as direct links to product information, quotes and applications. The program also includes a personalized client Web site. This new tool will help you improve customer satisfaction by allowing clients to view a video and access other information during non-business hours.
Few Second Chances in Retirement
An astounding 95 percent of employees take lump-sum distributions from their 401(k) accounts when they retire.9 The problem is, many people have trouble managing their money in retirement.
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In fact, regardless of how much money they have on the day they retire, four in 10 Americans over the age of 60 will experience poverty at some point in their later lives. One in two will experience near-poverty (income between the poverty level and 125 percent of this level).10
If your retired clients withdraw funds too quickly or overspend, the chance they’ll be able to regain their financial footing is slim. With CRI, your clients have an easy-to-implement roadmap to long-term financial security. You provide the tools and products that balance safety with growth, allowing them to preserve principal and maintain purchasing power throughout retirement.
For you, CRI is a turnkey sales program designed to boost your credibility as a "retirement planning expert."
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I want to: |
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Learn more about The Customized Retirement Income Model (CRI). |
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Learn how Symetra can help me become a retirement income expert. |
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Become appointed with Symetra in just 7 minutes by calling 1-800-210-1106 (option 1). |
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Currently we offer Symetra Advantage Income Immediate Annuity and Symetra Freedom Income Annuity for segment one, Symetra Custom fixed deferred annuity for segment two, and our Spinnaker® Series of variable annuities for segments three through six. Symetra Life is also adding new products and tools to strengthen the CRI program.
Make no mistake, there is a great wave of retirement money coming and consumers are looking for answers. Be ready.
Visit us online to learn more about The Customized Retirement Income Model and Symetra Life’s other retirement income distribution products and tools, or contact the Sales Center at invest@symetra.com or 1-800-706-0700.
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1 N. Anderson, Ph.D., and Peter B. DeTurk, Ph.D., (March 21, 2002), National Vital Statistics Report: United States Life Tables, 1999. Retrieved Oct. 4, 2004, from National Center for Health Statistics: http://www.cdc.gov/nchs/data/nvsr/nvsr50/nvsr50_06.pdf
2 Joanna Short, Economic History of Retirement in the United States, EH.NetEncyclopedia, edited by Robert Whaples. Oct. 1, 2002: http://www.eh.net/encyclopedia/?article=short.retirement.history.us
3 Cerulli and Associates, 2004.
4 Federal Reserve Bank of Minneapolis, Consumer Price Index (Estimate) 1800-2005, Economic Research and Data page: http://minneapolisfed.org/Research/data/us/calc/hist1800.cfm
5 CPI Inflation Calculator at http://data.bls.gov/cgi-bin/cpicalc.pl.
6 Dalbar Inc., April 2005.
7 CRI Probability 1955-2004, Ibbotson 2005 Yearbook.
8 These numbers are hypothetical and for illustration purposes only. They do not reflect specific investment performance.
9 From the article entitled: “Making 401(k)s Last by Offering Annuities”, By Jessica Marquez, in the August 2005 edition of Workforce magazine, which can be found at this link: http://www.workforce.com/section/02/feature/24/13/64/241369.html
10 Beyond 50 — A Report to the Nation on Economic Security, AARP, May 2001
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