Fidelity Introduces Retirement Income Advantage

June 9, 2004 ( - Fidelity Investments on Wednesday unveiled a new program that is aimed at the 76 million baby boomers nearing retirement age who have not been told how they can live off their retirement savings in such a way that it will grow through retirement.

Fidelity, the nation’s largest mutual-fund company, said Fidelity Retirement Income Advantage is an integrated suite of in-person, rep-assisted and online services and tools that helps investors plan for, monitor, and manage their complete financial situation throughout retirement.

Fidelity’s Retirement Income Planner guides investors through five key retirement risks:

  • spending
  • health-care costs
  • longevity
  • market risk
  • inflation.

Robert Reynolds, vice chairman and chief operating officer, said the program tries to push people to realize what health care means in retirement.   The program also provides customers with a real-time analysis and Monte Carlo simulations that can be used to predict how long assets may last, tips for closing potential gaps between income and expenses, and an action plan for immediate steps.  

The program allows participants to create an Income Management Account in which they can monitor their complete financial situation:

  • performance of both Fidelity and non-Fidelity assets
  • multiple income sources such as various 401(k) and other retirement accounts
  • brokerage accounts
  • mutual funds
  • expenses
  • spending levels.  

The Income Management Account uses Fidelity’s Web-based Retirement Income Planner to develop a financial action plan for each investor that analyzes an income portfolio, retirement spending, and cash flow to create and provide a pension-like paycheck into a spending account that is also visible online.   Investors can request e-mail or phone alerts regarding expected or missing Social Security or pension deposits, dates for minimum required distributions, dates for quarterly estimated tax payments, as well as warnings if spending cash needs replenishing or investment strategies drift off track.

Although there has been an abundance of tools and advice on saving for retirement, said Cynthia Egan, an executive vice president at Fidelity, there was a recurring series of weakness in the education for the distribution phase of retirement.

“I think this is the largest do-it-yourself project in the history of this country that’s being put on these people’s laps,” said Reynolds at a New York news conference, of the retirement savings challenge. “And people are concerned.”

Reynolds said the program tries to address the problem of replacing those things the workplace has afforded them, such as “the convenience of automatic deductions for taxes, insurance, savings and other systematic payments that American workers can take for granted.”  

The program, available to both retail investors and institutional plan participants, allows investors to use the online program themselves or to receive assistance from a Fidelity representative on the phone or in person at aFidelity Investor Center .

The program is currently free, and will remain that way until the end of the year, said Egan.   Early next year, an annual fee will be introduced for customers with accounts of less than $100,000, though Fidelity has not yet settled on what that will be.

Reynolds said the program will be enhanced every three to six months, and that there will be a second roll out around the end of September.