Controllable vs. Uncontrollable: Navigating Risks to a Retirement Spending Plan

A critical element of a successful retirement spending plan is creating consistent and sustainable income. When creating a plan, there are four main variables you can control: client’s retirement age, pre-retirement contributions, retirement income amount, and the asset allocation of the portfolio. After identifying a spending plan based on what clients can control, the plan is still exposed to four major uncontrollable risks: longevity, market returns, inflation, and portfolio shocks.

This session uses Monte Carlo analysis to help you better understand the impact of changing the factors clients can control as well as how sensitive the portfolio may be to uncontrollable risks. Additionally, we’ll evaluate the efficacy of adding a registered indexed linked annuity (RILA) with guaranteed lifetime income through an income benefit rider that is available for an additional cost to a traditional equity and bond portfolio to help clients better handle the uncontrollable risks in retirement.

Learning Objectives:

• Discuss factors you can help clients control when advising them on their retirement plans and how each recommendation affects the plan’s chance of success
• Discuss uncontrollable factors and how big of an impact they can have on a retirement plan
• Show recommended retirement portfolios which include a RILA with the opportunity for increasing income which performs better when facing the uncertainty of retirement

Session Content Level: Advanced

This session is sponsored by Allianz Life Insurance Company of North America.