Chart a smoother course for retirement income with a lower Portfolio Reliance Rate.
Portfolio
Reliance Rate
Mapping a well-devised course is vital to help your clients reach their retirement savings and income goals. Of course, part of the planning process involves developing a diverse investment strategy that may serve as a cushion against market fluctuations.When navigating to a well-rounded portfolio one key factor that’s often overlooked is the client’s portfolio reliance rate.
What is a Portfolio Reliance Rate?
This important number is simply the percentage of one’s retirement income that will come from non-guaranteed income sources, such as stocks, bonds, mutual funds, etc. The higher your client’s reliance rate, the more they’ll rely on these unprotected investments for their income needs.
A higher portfolio reliance rate – generally more than 50% – could mean your client’s retirement income and lifestyle are more vulnerable to market downturns.
​​
Understand the Numbers
To determine how well a client’s retirement strategy could weather a market downturn, start by calculating his or her reliance rate.
A Direct Path to Guaranteed Lifetime Income
See the Difference an Annuity Can Make
The advisor helps her client Pat purchase an annuity to provide a new source of guaranteed lifetime income, which also reduces Pat’s portfolio reliance rate.
Pat has a $1 million portfolio, plans to retire in three years at age 70 and needs $80,000 in annual income. Let’s assume the advisor helps Pat move $300,000 to a WealthChoice FIA with the Guaranteed Lifetime Benefits Rider and a 7% lifetime withdrawal rate. This provides Pat with $21,000 of protected annual income.
BEFORE
AFTER
To learn more about offering lifetime income solutions for your clients that may lower their portfolio reliance rate contact our sales team. Advisors may want to partner with the client's tax professional to assure not only a better reliance rate but also the most advantageous income/tax situation overall.