The changing retirement landscape: What to know now


— Previous generations of Americans were able to retire with confidence, knowing that they could count on a steady stream of income from what is often referred to as the “three-legged stool” of company pensions, social security and personal savings.

Today, for most workers, the retirement landscape is different: the availability of traditional pensions has plummeted, wage stagnation has dampened how much middle-income savers can set aside, and the level at which Social Security can play a substantial source of future retirement income is in flux.

And now experts are warning that many insurance products that replicate the “paycheck for life” provided by traditional pensions are becoming at risk in this new world. Especially threatened, say retirement specialists, are annuities, which have traditionally offered guaranteed lifetime income no matter what happens in the markets.

“For millions of Americans with moderate incomes, such guarantees are increasingly necessary to help them prepare for a financially stable retirement that could span several decades,” says Helene Rayder, Vice President at Lincoln Financial Group.

However, some retirement insurance experts are concerned that new regulations proposed by the U.S. Department of Labor (DOL) intended to improve customer value by eliminating conflicts of interest between advisors and their clients, could hurt consumers instead. Rayder says the rules could potentially:

• Make it economically unviable for commission-based financial advisors to serve average consumers, forcing individuals to work with more costly pay-based advisors. This will limit the financial advice many middle class savers rely on today.

• Reduce the choice of retirement products savers have in planning, potentially eliminating middle class savers from choosing commission-based accounts.

• Deter financial planners from offering annuities, and as a result savers will pay more and get less over the long term.

• Could cost families billions more instead of helping them save. A recent report published by Economists Incorporated says the cost could be as much as $80 billion nationwide.

To learn more, visit Lincoln Financial Group’s page, which provides information about the rule.

“While well-intended, the rule’s one-size-fits-all approach will negatively impact middle class savers,” says Rayder. “Americans can get involved by encouraging the DOL to change its rule, and ask their congressional representatives to make the same request of the Administration.”