PlanAdviser

Annuities Are Potentially More Useful Today Than Ever

Anxiety about turning DC plan assets into a “lifetime retirement paycheck” in such a low-rate environment is keeping aging Americans in the workforce—including many who very likely have enough money saved to retire comfortably and don’t want to keep working.

David Lau, founder and CEO of DPL Financial Partners, a firm that bills itself as a commission-free insurance network for retirement plan and wealth management fiduciaries, uses a personal story to explain the source of his deep interest in the topics of income insurance and annuities.

“Watching my father’s experience during his late career really drove me to become interested in annuities,” Lau says. “My dad was a successful professional who by the end of his career clearly had enough assets saved for retirement, but he kept working for five or six years after the traditional retirement age.”

Lau and his other family members assumed their father simply liked to work and would never hang it up willingly. In reality, Lau’s father choose to keep working because he thought he had to.

According to Lau, his father’s long-term financial adviser had very little knowledge about—and thus very little help to give with—the decumulation phase of retirement and wealth planning. As a result, Lau says, his father was not presented with the clear and compelling evidence that he had amassed enough wealth to retire comfortably. There were no retirement income projections being given, no estimations of future living expenses, and no distinctions being made between discretionary and required income.

“As soon as I had the chance to sit down with my dad and his adviser and ask about the retirement paycheck, I could see immediately that the adviser had a totally lackadaisical approach when it came to planning for spending in retirement,” Lau recalls. “The best he could say was, ‘We’ll figure it out as we go along.’ Hearing this, we went out and found my dad a new adviser that was focused on real retirement planning. My father is now happily retired, and his only regret is that he hadn’t found this support sooner.”

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