But, while retirement plan providers and plan sponsors are offering information, calculators and retirement income products, this is not enough. Individuals need a process for converting their resources into income in retirement, contended Bryan Hodgens, SVP and director of sales at Wells Fargo, speaking at the 42nd Annual Retirement & Benefits Management Seminar, hosted by the Darla Moore School of Management of the University of South Carolina, and co-sponsored by PLANSPONSOR.
Hodgens suggested six steps in the process for participants:
1. Estimate duration of retirement assets;
2. Identify retirement risks and ways to manage risk;
3. Identify distribution, tax and estate issues and opportunities;
4. Identify options for filling the gaps;
5. Convert resources into income; and
6. Throughout retirement, evaluate and maintain or update the plan. Participants need help understanding how their investment allocation should be different in the distribution phase than it was in the accumulation phase. Diversified income planning includes stable income, growing income and guaranteed income, Hodgens said. Stable income could include government, corporate or municipal bonds and/or certificates of deposit. Growing income could include dividend-paying stocks, mutual funds and closed-end funds. Guaranteed income could include fixed and index annuities, immediate annuities, variable annuities and Social Security.