By Cyril Tuohy
Wells Fargo Advisors, the brokerage unit of Wells Fargo & Co., has announced the launch of Income Center, a suite of tools and software applications that offers advisors and investors details of retirement income scenarios.
Income Center is designed for clients who already have an Envision plan, a proprietary planning process advisors use to design custom retirement programs for clients. It also represents a broader trend in the industry to move toward income [protection scenarios.
For years, investors have heeded the retirement industry’s clarion call of building up assets by investing “early and often,” through individual and employer-sponsored defined contribution retirement plans.
Now, with many baby boomers no longer contributing to their retirement plans as they move past their working age and deeper into retirement, the time has come to think about how to begin withdrawing assets.
As many financial advisors know, in a defined-contribution world, withdrawing assets is often more challenging than accumulating them.
“Once you reach retirement age, there is an even greater need to have a deeper understanding of your retirement income plan,” Warren Terry, managing director of FA Platform, Wells Fargo Advisors, said in a news release.
Features of Income Center include an “income dashboard,” income strategies and portfolio withdrawal scenarios, Wells Fargo said.
Withdrawal strategies depend on the combination of a client’s defined benefit and defined contribution plans, Social Security and other savings.
Because longevity — the number of years in retirement until death — is always a question, advisors need to plot a delicate balancing act based on a client’s individual circumstances. Some investors with few assets will live a long time, others sitting on a pile of wealth will die soon after retiring.
As a rule, many experts consider retirees underprepared financially for retirement, with inflation and wage stagnation adding to the pressure of saving enough for retirement, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index published in September.
The financial crisis in 2008 served as a wake-up call for millions of pre-retirees, who saw their holdings plummet following a period of asset growth inflated by the real estate bubble.
Boomers born in 1946 and who in 2008 were three years short of turning 65, found themselves with half the assets they had three years before in 2005 during the roaring economy.
The sudden change caused lawmakers and consumer advocates to begin talking about retirement plan reform, and to shine a spotlight on retirement income instead of retirement plan assets.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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