Research Reports From Security Benefit Point To A Different Approach For Retirees Seeking Sustainable Income

Actuarial Studies Suggest Fixed Indexed Annuity Products Increase Potential For Retirement Success

Jan 08, 2013, 11:00 ET from Security Benefit Corporation

TOPEKA, Kan., Jan. 8, 2013 /PRNewswire/ -- Security Benefit Corporation, a leading provider of retirement savings and income vehicles for America's pre-and post-retirees, today released a series of research papers confirming that fixed indexed annuities (FIAs) used in combination with traditional retirement portfolio strategies significantly improve the chances of creating sustainable income throughout retirement.

The papers – "Planning With Certainty: A New Strategy For Retirement Income" – describe the results of research the firm conducted with a leading independent actuarial consulting firm, on various joint and single life retirement scenarios.

The tests were designed to determine the best allocation among a range of investment choices to optimize chances for retirement planning success, specifically not running out of income and leaving assets behind. Using an approach similar to 'Modern Portfolio Theory,' the analysis considered allocations between three modern strategies:

  • Mutual fund systematic withdrawal (base case)
  • Variable Annuities (VAs) combined with mutual fund systematic withdrawals, and
  • FIAs combined with mutual fund systematic withdrawals.

(For strategies that included either an FIA or a VA with a Guaranteed Lifetime Withdrawal Benefit (GLWB), retirement income was funded by mutual fund withdrawals for the first 10 years of each projection period, and then from the GLWB.)

Based on the research's optimal retirement income allocation, the point along the efficient frontier that best reduced the risk of failure and heightened the odds of success included an FIA with a GLWB in the portfolio mix. The analysis further suggested that combining FIAs with a GLWB and conventional mutual fund spend-down strategies produced higher potential for achieving the goals of a personal retirement income plan.

"We can see that FIAs that include a GLWB rider can offer retirees a predictable income they can never outlive," said Doug Wolff, President of Security Benefit Life Insurance Company. "While there are a number of vehicles in the marketplace that can generate guaranteed income in retirement, including highly popular variable annuities, FIAs are able to generate attractive income from retirement assets without having to annuitize or give up control of the assets."

FIAs are a type of annuity that grows at the greater of a guaranteed minimum rate or interest that is linked to the return of a specified market index, like the S&P 500®. By design, FIAs include the potential for some market-linked interest credits with no risk of loss of principal because of market downturns and volatility, a feature made more compelling by the volatile markets of the last decade.

"When trying to create sustainable retirement income, feeling comfortable about where your money is invested is as important as how it's invested," says Wolff. "An FIA can provide a foundation for a retirement income portfolio that creates safe income potential for life. Other investments can then cover expenses that may grow or be less predictable during the course of your life. Retirees and pre-retirees should consult with an advisor to determine the right combination of guarantees and investments."

While the analysis strongly suggests that retirees will not be able to finance a sustainable retirement income with only one traditional product class, it also suggests that implementing a framework that mixes and matches mutual funds and FIAs in various combinations can be an effective way to utilize available resources to generate lifetime income, protect against expenses related to unforeseen events, and help maintain purchasing power over the life of a retiree.

"The market volatility of the last decade has not only affected investors, it's had tremendous impact on companies offering retirement products. We have long suspected there was a better way to generate sustainable retirement income and help advisors succeed in their planning," said Wolff, "and the analysis suggests we were right. The papers are must-reads for any financial adviser in the business of building retirement portfolios."

Security Benefit, a Guggenheim Partners company, offers a comprehensive suite of retirement savings products, including both accumulation and income annuities, retirement plans, and mutual funds. The firm serves individual and institutional investors through a broad network of independent financial representatives across the nation.

The research reports – "Planning With Certainty: A New Strategy For Retirement Income" – are available to financial advisors through Security Benefit's Retirement Income Challenge website.

About Security Benefit Corporation

Founded in 1892, Security Benefit Corporation, a Guggenheim Partners Company, is a leading provider of savings and income solutions for America's pre- and post-retirees. Security Benefit Corporation targets multiple wealth segments and channels of distribution through an independent, merit-based distribution structure. By leveraging the superior general account management capabilities of Guggenheim Investments, a subsidiary of Guggenheim Partners, into highly competitive products, Security Benefit Corporation focuses on the retirement savings market providing a full range of services to independent distributors including broker/dealers, IMOs, and other financial service providers. Security Benefit is indirectly controlled by Guggenheim Partners, LLC. To learn more about Security Benefit, visit

For more information, please contact:

Dan Mahoney, Communications Strategy Group
(970) 405-8060

Michel' Cole, Security Benefit Corporation
(785) 438-3396

In all states except New York, annuities are issued by Security Benefit Life Insurance Company (SBL). SBL is not authorized in and does not transact insurance business in New York.

Guarantees provided by annuities are subject to the financial strength of the issuing insurance company.  Annuities are not FDIC insured; are not obligations or deposits of, and are not guaranteed or underwritten by any bank, savings and loan or credit union or its affiliates; are unrelated to and not a condition of the provision or term of any banking service or activity.

SOURCE Security Benefit Corporation