A New Strategy to Generate Lifetime Income

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Despite more than a half-century of research detailing the potential value of guaranteed lifetime income products for retirees, sales of annuities remain low. There is a new annuity gaining traction in the marketplace where the lifetime income evolves based on account performance where the account value is accessible, an approach we call a “Protected Lifetime Income Benefit.” This presentation contrasts this particular structure against other annuities focused on lifetime income and provides context for which types of retirees the respective solutions are likely to work best.

Why annuities should be considered as part of a retirement income plan.
The payout mechanics for single premium immediate annuities (SPIAs), deferred income annuities (DIAs), annuities with a Guaranteed Living Withdrawal Benefit (GLWB), and Protected Lifetime Income Strategies (PLISs).
Why utility is a better metric to estimate optimal retirement strategies versus the probability of success.

Competency Level: Intermediate

FPA Competency: Critical Thinking

CFP Board Topic: General Financial Planning Principles

CFP Board CE Credit Hours: 1

David Blanchett, Phd, CLU, ChFC®, CFP®, CFA®

Head of Retirement Research

Morningstar Investment Management, LLC

David Blanchett, PhD, CFA, CFP®, is Managing Director and Head of Retirement Research for PGIM DC Solutions. PGIM is the global investment management business of Prudential Financial, Inc. He is also currently an Adjunct Professor of Wealth Management at The American College of Financial Services and Research Fellow for the Alliance for Lifetime Income. David has published over 100 papers in a variety of industry and academic journals. When David isn’t working, he’s probably out for a jog, playing with his four kids, or rooting for the Kentucky Wildcats.