Life Insurance and Annuities Optimize Retirement Income
The business consultants at EY have analyzed the effectiveness of several retirement funding strategies. Their study concludes that a well-diversified mix of investments, life insurance, and annuities optimize retirement income. Let’s take a look at what they found.
Retirement Income Shortfall
EY estimates that by 2030 there will be a $200+ trillion retirement income shortfall. Life insurers offer several ideal products that can easily address this gap. Tax-favored life insurance products can be optimized to provide both death benefits and boost retirement savings. During retirement, high quality guaranteed lifetime income annuities reduce, or eliminate, a retiree’s fear of running out of income.
Monte Carlo Modeling
In order to establish an optimized retirement income savings strategy, EY ran several thousand Monte Carlo models for various age groups. They considered different interest rate and inflation environments, as well as fluctuating returns for equity and fixed income portfolios. They compared “investment only” strategies with those that integrated cash value life insurance and annuities.
Optimizing Retirement Income
Of course, each client’s situation is unique and requires personalized analysis. One key question for clients: How important is maximizing retirement income relative to maximizing legacy benefits? Once those priorities have been established, Advisors can build an optimized retirement savings portfolio. EY’s study reveals that, for most clients, the inclusion of a certain percentage of high quality cash value life insurance and annuities optimize retirement income.
Life Insurance Options
Many life insurers offer products that are structured to provide significant death benefits, at the lowest possible cost, on a fully guaranteed basis. Other products are optimized to maximize tax-deferred retirement savings. Both types of products have their place in business and personal settings. Call your CPS Advantage representative, or request a callback via email. Let’s put our heads together to design an optimized life insurance strategy, based on what your client is trying to accomplish.
