Episode summary
Why Longevity Protection Belongs in Every Retirement Income Plan
Summary
Dan Gutman argues that retirement security is now less about accumulation and more about making savings last through a much longer retirement. He says longevity is the risk that magnifies inflation, market, sequence of returns, geopolitical and interest-rate risk, and that it cannot be diversified away. With 11,200 people turning 65 every day in the U.S. and only about 2% of the $34 trillion in retail nest egg assets carrying any protection for lifetime income, he sees a major gap between saving and sustaining income.
He says wealthier retirees can be especially vulnerable because they tend to live longer, spend more, and rely less on stable sources like Social Security and annuities. That uncertainty can cause retirees to underspend, even after decades of work, because they do not know how long their money needs to last. In his view, protected lifetime income can create a “license to spend” by giving clients more confidence to use their assets.
Gutman also says advisers should think about decumulation from day one, not just at retirement. He frames it as part of a holistic plan that includes legacy goals, family trusts, and charitable giving. On the product side, he points to fixed index annuities, registered index-linked annuities, and insurance overlays like Credential Active Income, which he says can provide protected lifetime income while advisers keep portfolio control and maintain liquidity and tax status.
Key takeaways
- Gutman says longevity is the retirement risk that magnifies all other risks and cannot be diversified away.
- He says only about 2% of the $34 trillion in retail nest egg assets has any form of protection for lifetime income.
- Gutman argues affluent retirees are often at greater risk because they live longer, spend more, and have less stable guaranteed income.
- He says protected lifetime income can give retirees a “license to spend” instead of underspending out of fear.
- Gutman says advisers should build decumulation into the plan on day one, not wait until the client is near retirement.
Notable quotes
“longevity is the risk that magnifies all others, and it's one that you can't diversify away”
“There's over $34 trillion of retail nest egg assets saved up today, but only about 2% of those assets has any form of protection”
“What protected lifetime income does is it provides a license to spend”
“advisers should be incorporating this in day one of a client relationship”
“they maintain control. So they can deliver protected lifetime income to their clients, but they don't need to transfer assets”
How the episode opens
Let's talk about longevity protection. To break it all down for us, I'm joined by Dan Gutman. Dan, thanks so much for joining me. — Thanks for having me, Sharon. — So, obviously, this is a pretty serious topic because when it comes to retirement security, folks may need income for, you know, even well beyond 30 years, right? So, the wealth management industry has obviously made tremendous strides and progress in helping clients grow their assets, but where do we still need to do a little more work when it comes to retirement security and longevity protection?
Well, thanks Shannon. We're we're here at the Horizon's conference where everyone is talking about retirement planning and the opportunity ahead. And with today's market volatility, we've seen an increase in momentum and solutions that provide downside protection, but there's still a huge opportunity for protected lifetime income.
When you think about all of the risks that people face in retirement, from inflation risks to market risk, sequence of returns, geopolitical interest rate risk, longevity is the risk that magnifies all others, and it's one that you can't diversify away. The longer your retirement is, the greater chance that any of those other risks will actually throw it off track. And people are living longer as well.
There's 11,200 people turning 65 every single day here in the US. And there's a direct link between income and longevity. So for people in the top two income deciles, they're going to live three to five years longer than the average American.
That means a 65year-old couple in that demographic has over a 50% chance to living to age 95 or older. And as you mentioned, the industry has done a pretty good job of helping people accumulate and grow wealth. There's over $34 trillion of retail nest egg assets saved up today, but only about 2% of those assets has any form of protection to ensure clients have an income stream that lasts as long as they do.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- longevity risk
- retirement income planning
- protected lifetime income
- decumulation strategies
- retirement security
Companies and tickers mentioned
- Prudential
Watch the episode
Watch “Why Longevity Protection Belongs in Every Retirement Income Plan” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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