As the retirement industry has transitioned from a defined benefit model to a predominantly defined contribution model, individuals’ personal responsibility in managing their retirement income has become increasingly important. In fact, as of the end of 2010, the percentage of assets within private pensions equaled roughly 19% — significantly lower than DC plans (40%) and IRAs (41%)*. Simply put, guaranteed income in retirement will not be as prevalent as it was for previous and current retirees.

Many of the 76 million baby boomers who will retire over the next two decades will find that their only source of guaranteed income in retirement will be Social Security. The remainder of their income will come primarily from drawing down personal savings from company retirement plans such as 401(k)s and IRAs. While market risk is an obvious challenge, longevity risk is an equal or a greater concern. According to life expectancy tables for couples age 65, there is a greater than 50% chance one of them will live to age 90. To complement Social Security and build a stronger foundation for income in retirement, clients should consider allocating a portion of their assets to guaranteed income products, such as annuities.**

Consider this example (based on rolling historical market results dating back to 1926) that highlights how adding a guaranteed source of income in retirement can improve thelikelihood of a client’s portfolio surviving as long as he or she does:

**Variable annuities are long-term investment vehicles intended for retirement planning. Annuities have insurance related charges and tax considerations, and are offered by contract only. All guarantees are based on the claims-paying ability of the issuing company.