The Alliance for Lifetime Income is renewing its sponsorship of the Rolling Stones for 2020. But this year it is also launching a new initiative that zeroes in on spending in retirement.
Called “M.U.G.,” for mortgages, groceries and utilities, it is designed to focus on essential expenses facing retirees. “Retirement income planning is the future for the financial advice industry and yet can be one of the most daunting challenges for advisors and their clients,” says Steve Gresham, senior education advisor to the alliance and chairman of Whealthcare Planning LLC.
Gresham believes financial advisors should begin retirement planning conversations by getting clients to focus on what is their monthly spending nut. In his view, the industry has devoted a surfeit of energy to help Americans accumulate serious sums of wealth while paying little attention to how they will spend it.
Clients as well as advisors have focused excessively on accumulation. Gresham believes that’s about to change.
In 2009, when the bull market began, the average baby boomer was 53 years old. Today, that same individual is 64.
The Alliance for Lifetime Income represents annuity companies and thus has a vested interest in altering the conversation about retirement. But other financial services giants outside the annuity space have also studied the topic.
Charles Schwab has just rolled out Schwab Intelligent Income portfolios. BlackRock has entered a joint venture with Microsoft to address the exact same issue. Given the clout of those two companies, the venture will be closely watched.
Annuity sales have started to spike in recent years. The demographics of an aging population are one factor behind the growth.
Gresham notes that there has always been a segment of the investing public looking at these vehicles. But given the low level of interest rates, retirees who might previously have purchased CDs and bonds now are looking for alternatives.
RIAs who once shunned annuities also are now giving some lower-cost vehicles a second look. In particular, more RIAs now see immediate annuities as part of the solution for clients no longer working.