Natixis to Offer New Retirement Spending Account
AlphaSimplex Group and Managed Portfolio Advisors® to manage strategy- Limits volatility; pursues capital preservation and growth; seeks to provide consistent income in retirement
“Retirement remains the number one investment priority for individual investors, and they worry about the costs associated with living longer, such as medical insurance, long-term care and inflation,” said
Contrary to traditional retirement income strategies, Natixis’ retirement accounts will begin with a conservative asset allocation and increase allocations to riskier assets, including equities and alternatives, for a period of time before decreasing risk as investors begin moving toward the end of the planning horizon.
“The allocation of higher-risk assets is low in early retirement to help limit volatility when withdrawals are just beginning,” explains Farrington. “This is the time when an investor is most susceptible to sequence of return risks, since a major market correction at the beginning of retirement could deplete a large percentage of the retirees’ total nest egg. The allocation to risk assets increases during mid-retirement to pursue potential returns to help protect against inflation and longevity risk, and then declines again late in retirement to preserve capital and prepare for transitioning assets to the next generation.”
The accounts will use an Adaptive Retirement Income GlidepathSM and a risk management framework. The account will seek to generate a steady cash flow calculated on the original investment in the program, at either a four or five percent withdrawal rate, with an annual inflation adjustment. The account remains liquid for investors throughout their lives and maintains flexibility beyond the standard monthly income payment to address life events.
The Retirement Spending Accounts will be made up of portfolios that include Natixis affiliate mutual funds and ETFs. The accounts are currently designed for investors who started retirement on or around years 2000, 2005, 2010 or 2015 and will be sold through registered financial advisors. The minimum investment is
“Life changes dramatically for clients entering retirement, and their investment strategy should change with them,” continued Farrington. “The Natixis ASG Retirement Spending Accounts give structure to the conversations that advisors are having with their clients about longevity and the retirement income challenge. With so many variables, it makes sense to work closely with your investment and tax advisors. They can help identify the opportunities and create a plan to optimize your spendable income.”
For more information or to read Natixis’ latest whitepaper on retirement, “A
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2Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non- regulatory AUM includes assets which do not fall within the SEC’s definition of ‘regulatory AUM’ in Form ADV, Part 1
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The Retirement Spending Accounts are designed to have the assets lasting for a specified time horizon with a prescribed distribution amount, but
and clients take those from this account that may also draw down assets in the account more quickly and will decrease the probability that the account will last through the full time horizon.
There is no assurance that any investment will meet its performance objectives or that losses will be avoided. There can be no guarantee that the investment amount plus earnings will last throughout an investor’s retirement period, or that cash distribution target will be met. Past performance does not guarantee future returns.
Definitions:
Sequence of Return Risk is the risk of receiving lower or negative returns early in a period when withdrawals are made from the underlying investments. The order or sequence of investment returns is a concern for individuals who are retired and living off the income and capital of their investments.
Volatility is the range of variation in the value of a security.
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