Las Vegas (May 7, 2004) -- Ensuring that your financial planning clients enjoy a sustained income stream following retirement hinges largely on successfully balancing their portfolios between annuitized and non-annuitized assets as they move from the wealth accumulation stage to the income distribution stage of their post-working lives, according to planning experts.


Regional planning specialists at Terra Securities’ national convention, here, revealed to attendees that an astounding 47 percent of workers and 40 percent of retirees have saved less than $50,000 for retirement.


"The population is maturing and Social Security will be in a deficit by the year 2018," said Terra’s Pat McNally. "[Social Security] will not be enough to live on. The average payout for a couple is $1,565. Benefits have risen 2.1 percent, but Medicare premiums have risen 13.5 percent."


McNally outlined several of today’s obstacles to retirement, including longevity. "If you have a couple who are 65, today there is a 60 percent chance that one spouse will live to the age of 90."


Terra specialists advised attendees to balance client assets with an array of products such as variable annuities with guaranteed minimum withdrawal options and equities, and to deploy strategies such as "bond laddering," investing in sets of specific bonds maturing at different "rungs" of a predetermined timetable.


"You have to make sure they’re realistic about distribution rates for their investments. In the 1990s there were people withdrawing 9 percent to 10 percent of their retirement funds and now they’ve learned a painful lesson," McNally said.


"You as planners need to position yourselves as retirement experts and that you know how to set up an income for them, said Robert Fezza CFP, another Terra Securities planning specialist. "Most clients have a finite amount of money. The most frequent reasons clients fire their financial advisors are lack of service and lack of returns."


-- Bill Carlino

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