Descending The Mountain: How To Craft A Decumulation Plan

If you analogize growing a strong retirement money pot to climbing a mountain, then it stands to reason that the decumulation phase represents the descent from the mountaintop.

At least that's how Walter Katz views it. A 35-year financial advisor and president of The K Corp. in Houston, Katz is a proponent of using everything available in crafting a sound retirement plan.

He is scheduled to speak today at NAIFA’s 2020 Performance + Purpose virtual conference, delivering a session titled "401k, Life Insurance & Income Planning: How to Spend It and Leave a Legacy."

"People should have what I would call multiple buckets of money, or different holdings, different types of money, stocks, real estate, whatever they're comfortable with from a risk perspective," Katz said.

Katz, who earned a risk management and insurance degree from the University of Texas, was destined to be in the financial advice world. He frequently mentions his 91-year-old father Larry Katz, who he describes as a legend in financial advising.

The younger Katz joined his father at the family company right out of college in 1985 and father and son worked together for many years.

One thing Katz learned is that the right answer for one client might not be the right one for the next, he said. The key is having a broad base of knowledge and reacting to the client needs and risk tolerance.

"Everybody wants our money," Katz said. "The mutual fund companies want our money. The brokerage accounts want our money. The insurance companies want our money. The banks want our money. And they kind of pit one against the other. And a lot of people end up with bias."

Fan Of Whole Life

Still, Katz has some strategies he likes and work well with a wide range of clients. One is whole life insurance.

"I'm a big believer in traditional whole life life insurance for either the guaranteed cash value and the role that it can play in retirement income distributions, or in the death benefit," he said.

Annuities are also a strong strategy for giving clients lifetime income, Katz said, adding that the emotional response to the product is very important.

"I don't always want to fight an uphill battle if somebody doesn't like them," he said. "I've heard a lot of presenters that say if you want a happy retirement, have guaranteed streams of income. So while the guarantees of the product are good, the name of the product suffers. And it precludes people from wanting to make that decision."

The current industry push to include annuities inside retirement plans has attracted support from Congress, where the SECURE Act passed in December and was signed by President Donald Trump. It removed many of the barriers to annuitizing a portion of retirement plans.

The sea change makes Katz chuckle when he remembers federal regulators frowning on the use of life insurance inside plans many years ago. Back then, the prevailing attitude was that life insurance was "too conservative" to be part of a retirement plan, he recalled.

"We'll kind of have to wait and see how long that bears out," he said of the current attitude toward annuities. "But I think it's good having that stream of income coming from the 401(k) plan. Whether the life insurance is inside of a retirement plan or outside, it just gives a lot more options."

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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