Report Concludes No Silver Bullet for Baby Boomer's Retirement Income
August 6, 2008 (Des Moines, IA) — With baby boomers hitting retirement age at the rate of one every 8 seconds1, there is no shortage of strategies to help them convert their hard-earned savings into a retirement income for life.
A new white paper from the Principal Financial Group® analyzes four key income-producing strategies and concludes there is no one-size-fits-all solution that works for everyone—and many boomers will need help from financial professionals to find the right, personalized approach.
The report, “Sustaining Income through Retirement: Four Strategies for Retiring Clients” compares and contrasts four key methods of turning retirement savings into an income stream:
- Mutual funds with automated income payments
- Variable annuities with guaranteed minimum withdrawal benefits (GMWB)
- Income annuities
- Combinations of mutual funds and income annuities
“Our analysis makes it clear there is no silver bullet in creating and managing an income stream for life that works for everyone,” said Drew Denning, vice president, Income Solutions at The Principal®. “Retirees need guidance and ongoing support from financial professionals to find the strategy that best meets their unique needs. This white paper makes it easier for financial professionals to understand the trade-offs and advantages of each key alternative.”
The white paper uses the same common assumptions to evaluate the pros and cons of each key strategy against factors that impact income in retirement:
- Access to the account balance
- Potential for growth
- Inflation risk
- Market risk
- Guarantees (or lack thereof)
- Income predictability
“We’ve been able to make an unbiased and objective analysis because we have expertise in a wide variety of income generating products and strategies,” said Denning.
The white paper concludes with an easy-to-read chart that summarizes the strengths and weaknesses of each retirement income strategy. The report is available in the Retirement Section of the Principal Research Center, www.principal.com/research.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®)2 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $304.2 billion in assets under management3 and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
Insurance issued by Principal Life Insurance Company. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc.
Securities offered through Princor Financial Services Corporation, 800/247-1737, member SIPC. Principal Life and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392.
© 2008 Principal Financial Services, Inc.
1) United States Bureau of the Census
2) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
3) As of March 31, 2008
