Annuities as an Asset Class for Fee-Based Advisors l 34 © Envestnet 2022
A retirement income strategy can extend beyond traditional investment
management to also use insurance and risk pooling with annuities as a
part of managing the changing risks of retirement. The process of building
a retirement income strategy involves determining how to best combine
retirement income tools to optimize the balance between meeting your
retirement goals and protecting those goals from the unique risks of
retirement. Retirement risks come in many forms, including unknown
planning horizons, market volatility, inflation, and other spending shocks.
Each of these risks must be managed by combining different tools and
tactics, each with different relative strengths and weaknesses.
Retirement spending goals can be met through distributions from the
investment portfolio, through annuitized income annuities, and through
lifetime distribution provisions from deferred annuities. Product allocation
is about how to combine these different tools into an overall plan. With this
approach to retirement risk, it becomes hard to counter the notion that
risk pooling and insurance have an important and valuable role to play. But
this still leaves many questions about what type of annuity to use and what
specific contributions an annuity can make.
Retirement spending goals can be met through
Fitting Annuities into a
Retirement Plan
distributions from the
investment portfolio
annuitized
income annuities
lifetime distribution
provisions from
deferred annuities
Annuities as an Asset Class for Fee-Based Advisors l 34 © Envestnet 2022
