The biggest challenges in generating retirement income

May 18, 2014 @ 12:00 am

Runtime: 2:26

Generating stable retirement income is all about considering market changes with other risks including inflation and longevity. Here, advisers and industry experts weigh in on how to best address those challenges.

Video Transcript

[MUSIC] Here at the 2014 Investment News Retirement Income Summit, we talked with advisers and some of the top industry executives about what the biggest challenges are for generating new sources of retirement income. Here's what some of the top minds in the industry had to say. One of the biggest challenges when generating retirement income is that the risks that we need to address go far beyond market risk. So let me give you an example. When living a longer life in retirement than our parents did, longevity risk is very real. Secondly, inflation is, has a corrosive effect on a retiree's life. At historical inflation rates, $1 is worth 50 cents in as little as 20 or 21 years. So these type of risks need to be addressed, as well as generating simple income. And in doing so we believe that we need to help investors build a personal, durable portfolio that lets them stay invested for a long period of time. The challenge is that this generation of retirees is completely different than the last generation. So, when you have circumstances where individuals are reaching their retirement age, but they're not retiring in many cases, because they need to continue to receive income from their employer, or the, and, because they didn't save enough, quite often or they enjoy working and they wanna continue. Or they may be they may retire and take up a second career at some point. We need, our role is to develop and design products that fit for this generation of retirees. So, we need to develop products that give them consistent and predictable income now, and we need to develop products that are flexible enough so that they may choose to turn off the income for a while, turn it back on later, or they may increase it, decrease it. We wanna have flexible products that, that provide for their solutions in a variety of circumstances they face. Well, I think the fundamental issue, facing a lot of retirees today is generating sufficient income for retirement, in a relatively low yield financial environment. And generating that income in a way that's relatively low risk, low volatility, and can potentially address some of the risks that people see out there, whether it be inflation or rising interest rates. [MUSIC]

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