It’s not exactly news to note the industry has struggled with effective distribution planning strategies.
A hyper-focus on accumulation has gotten many a participant to where they need to be, only to be set adrift on a sea of unnecessary tax hits, sequence-of-return risk and so much more that can prematurely exhaust the retirement portfolio.
Luckily, more firms understand the retirement crisis is one of saving and spending, and are now developing and releasing tools to help.
The latest, the LifePath Spending Tool from BlackRock, launched Wednesday, and provides retirees with an estimate for how much they can spend in retirement.
“According to BlackRock’s recently released DC Pulse Survey,” the investment giant notes, “retirement income is a top concern for investors and plan sponsors.”
Indeed, it finds:
- 93 percent of DC plan participants in the survey are looking for guidance on retirement income;
- 90 percent of plan sponsors feel responsible to help;
- Only 36 percent of Americans are confident they will have the retirement income they need.
By indicating their age and retirement saving, a retiree can immediately receive an estimate for current-year spending and spending over the course of their lifetime.
“The tool utilizes BlackRock’s long-term capital market assumptions, and unlike many decumulation strategies, explicitly addresses longevity by factoring mortality probability into its extended forecast,” it adds. “It provides a spending estimate for retirees aged 63 to 95 who have their savings invested in a 40/60 portfolio, and can be used by individual investors trying to come to grips with when to retire, and how much income they’ll need to maintain quality of life.”
The tool will initially be shared with plan sponsors to share with their participants. Over time, a link to the tool will be made broadly available to the general public on BlackRock’s website.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
