The Hire thru Retire Podcast

Lifetime Income with Voya's Jeff Cimini

• Voya Financial • Episode 21

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Bill and Heather are back today with one Voya’s own experienced professionals to talk about an important and popular topic in the industry and that is: lifetime income. In this episode, Bill and Heather are joined by SVP of retirement product management, Jeff Cimini, who you all might remember from last year’s episode on Pooled Employers Plans. Lifetime income is becoming a more popular topic and one that plan sponsors are getting more questions about as their participants start to think about how they make their nest egg last throughout retirement. As a result, Jeff’s here to share more on why lifetime income solutions so important and why now.

 

Bill Harmon and Jeff Cimini are registered representatives of Voya Financial Partners, LLC (member SIPC).

 

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Speaker 1:

You're listening to hire through retire, a health and wealth podcast with FOYA leaders, bill Harmon, and Heather LA valley tackling all things from 401ks to HSAs and everything in between. We're talking to the best and brightest in the industry to bring you the latest in health, wealth, and investment trends in the workplace. Come along with us on our journey to help all Americans well planned, well invested and well protected.

Speaker 2:

Welcome back to hire through retire, a health and wealth podcast. We've come a long way since we first started this podcast journey and wanna send a sincere thanks to all of you for tuning in and continuing to tune in. For those of you who've been with us from the beginning, you might remember we've had some of our Voya colleagues on this pod and we're back today with a repeat guest before we get there, though. Let me welcome back. My co-host bill Harmon to kickoff today's episode.

Speaker 3:

Hey, thanks, Heather. And happy to be back with everyone today and happy new year. It is 2022, so excited and, you know, I hope everyone had some time to relax over the holidays with their family and friends and well, we missed you. And so hopefully there was a little element of you saying, Hey, when's the next podcast? So as Heather mentioned, we're back today with one of our own Voya experts, and he's here to talk about an important and really popular topic in the industry and that's lifetime income. So here to join us as our very own senior vice president of retirement product management at Jeff Simi, who you all might remember from last year's episodes on PEPs. So Mr. Simi, it is great to see you and great to chat with you. And thanks for coming back. I'm glad we didn't scare you

Speaker 4:

Away. Thanks bill. Thanks Heather. You can't scare me away. I guess we have

Speaker 3:

To try harder, Heather. Anyhow, Hey Jeff, you know, lifetime income is really becoming more and more popular in the industry in a sense, you know, you think we've done a good job in telling people they need to save and get to a certain number. And then all of a sudden you get this number and you're ready to retire. And the question is, what do I do with this now? How can I think about taking this nest egg that I've developed and making sure that I can spend wisely and not run out throughout retirement? So I guess in your opinion, and why are lifetime income solutions so important and, and why now? Great

Speaker 4:

Question bill. You know, I think there's a couple things. The macro view, uh, I'd suggest is really people living a lot longer. You know, if I go back to really just the, the mid fifties, my parents, uh, kind of range, the average worker lived to about 77 years old today through healthcare advances and, you know, a healthy lifestyle on average men or women are living into their mid to late eighties. I read an article actually over the weekend that suggested that the folks going into the labor force right now, my children will most likely on average live into their nineties. And a fair amount of them will live over a hundred. You know, that makes things a little bit more complex. When you tire in your sixties, you've got 35 years to have your nestag last a lifetime, and we've got the baby boomers now in the heart of retiring. So you've got the largest cohort of employees at a time when people are living a lot longer and it makes this riddle a little bit more difficult when

Speaker 2:

You talk about this becoming a popular topic. One thing that comes to mind for me is legislation, which we've talked about a lot on the show and it may have sparked or started the conversation around lifetime income planning for advisors and plan sponsors. Can you let us know, have there been any notable actions Congress has taken as it pertains to life time income solutions as part of the overall retirement legislation?

Speaker 4:

Great question, Heather. And, and thanks for asking that in a short sense. Yes, there has been, uh, legislation about two years ago, uh, just before Christmas time, actually the secure act became law. And in there it actually provided a safe Harbor for employers plan sponsors that if they followed a certain set of procedures, that they protected for the type of lifetime income programs that they offered within their plans. This was something that employers, uh, those of us that work in the industry, even employees, consultants, and advisors had really been asking the government for assistance on the rules up until that point were rather vague. And many of us feel like this did a really nice job of closing that gap. And the reason that we believe that that gap was necessary was to allow plan sponsors, to be more comfortable in offering some of these programs that have very long time periods associated with them. So if you're a 65 year old and you retire and you pick an plan annuity, as you are option, you'll get paid for the rest of your life, no matter how long you live. Like we talked about earlier in this podcast, that could be upwards of 35 or 40 years. And so this allowed fiduciaries to be a little more comfortable in offering some of these programs that quite frankly, all of us really wanted. I think it's a great example of a, a bipartisan support led by industry and market participants, working with the government to come up with legislation that really at the end of the day, values employees and their options to generate lifetime income. So, Jeff,

Speaker 3:

You know, you, you talked about life expectancy, creating some popularity in this topic right here. Let's talk about another hot topic and that's inflation. Give us your thoughts on how inflation has had an effect on retirement security and really the interest in these types of solutions for individuals themselves.

Speaker 4:

Another great question, bill, you know, we've had a very long time period of very low inflation. So many folks don't remember when inflation was very high in the 1970s, as an example, inflation was much higher than all of us wanted, and it had a very negative impact on retirees. I grew up in a small town in Western Massachusetts where general electric was the largest employer. And for those that were retired at the time on what they referred to as a fixed income, saw their purchasing power diminished rather significantly. We may be starting to see a little bit, bit of an increase in inflation versus what we've experienced over the last 30 years. But nonetheless, it's a really strong consideration when trying to determine how to generate a lifetime income. So a lot of the legislation that we talked about earlier that Heather asked about, and some of the products that we're seeing developed in the marketplace are really a combination of investments, as well as a lifetime income guarantee. And because these investments are not necessarily in fixed income, they do have an ability to keep up with inflation. So we're starting to see a lot of product development that tries to answer both. The question is that you all have asked me, one is how do I ensure that my nest egg will last a lifetime and two, how do I keep ahead of inflation? If we start to see prices increasing across the board, once I'm retired.

Speaker 2:

So Jeff, I'm gonna switch gears a little bit and we'll, we're gonna talk about plan sponsors and employees, you know, understanding how retirement income solutions can fit into one's overall benefit package might be a question for many, and we know that there's no, uh, one size fits all approach, but what types of solutions are you hearing are more popular or helpful when it comes to creating a comprehensive income strategy?

Speaker 4:

Oh, that's a great question, Heather. Uh, this is the one that I probably spend most of my time working on with, um, other companies with our plan sponsors, even asking advisors, consultants and participants, what their perspectives are. And the interesting thing that we're learning through this process is everybody has a different interest. My interest about how to generate lifetime income may be very different than yours. Heather May be very different than yours bill. Our situations are different. And as such, I think what we're starting to see in the marketplace is certain product features that allow for each individual to customize their own program. Many of the programs that we're seeing are attached to asset management services. And by that, I mean, they'll invest the money for the participant. It could be a very confusing time. Many people in retirement don't want to take the time to do their own investments. And so a lot of these products come with investments as a core component of it. The one thing though that is rather interesting is that most of the lifetime income features are options. Meaning a participant has an option to select it or an option simply to take the investment component of it only. And that has really, I think, increased a lot of interest level from consultants, advisors and plan sponsors because it's not an either or decision it's an either or decision at the individual participant level. So we're starting to see a lot of creative organizations create products that allow for flexibility to respect and kind of align with the individual interest levels of the participants that are considering them. You know, let's

Speaker 3:

Keep on that topic of interest on employers and employer sponsored plans. When we look at these employer sponsor retirement plans, what have you been hearing from clients or ultimately their plan participants about the interest in providing these types of retirement income options within their employer sponsored plans? And I guess another question, and it's really been an important one. How can these solutions help participants even if they leave their employer and retire?

Speaker 4:

You know, it's a great question, bill. If I go back to some of the conversation that we had a little bit earlier in terms of why we asked for the department of labor to help us with legislation, to give us greater clarity, a big reason behind that was the interest level of employees who wanted to stay within their plan. They were thrilled with the plan that their provider offered them. They were thrilled of the benefit that their employer offered them. They wanted to stay within the plan, but quite frankly, didn't have an option in the plan that could help them with a lifetime income. And so they felt forced to leave the plan in order to get investment expertise, as well as a lifetime income strategy. And so I think we were moving as an industry is to provide, again, an option to those participants who want to stay in the plan, an opportunity and a solution that allows them to do that. And yet still receive lifetime income participants who would like to go with their advisor and generate a custom plan, maybe combine some outside assets that they have at other organizations or other places and develop a lifetime income plan can still do that. But this provides those that have been thrilled about the retirement plan that they've been a part of can stay in there and still receive lifetime income.

Speaker 2:

So Jeff, as our discussion comes to a close, I wanna wrap up a couple themes that you've talked about today of, you know, we're seeing more and more people living longer. So lifetime and income is, is top of mind. Certainly we've seen some favorable changes in legislation that are supportive of lifetime income. You talked a bit about, uh, inflation and maybe it hasn't been as much of a, of a reality for us recently, but certainly has a history and, and something we're seeing a little bit on the rise. And lastly, you talked about, there is no one size fits all option and how do we create the either or option at the participant level, whether that's staying in plan or moving out of plan. So a lot of really good insights here. And, and I'm gonna wrap with one final question for you from a benefits offering perspective and knowing that the competition for employers today is fierce to attract and retain talent. How do you see life time income solutions playing a role in the offerings employers might consider when it comes to their overall offering and what other areas are employers focused on beyond the retirement plan?

Speaker 4:

Great, great question, Heather. Uh, there's two things that immediately come to mind. One is certainly a more robust benefit offer to a prospective of employee is something that can really attract'em to your organization. And, and I think having the ability to generate a lifetime income from their plan is certainly a key feature of that. But the second thing, which is probably a, a little bit more critical, and I think it's a learning that we had a sense that was there, but was accelerated by our experience in COVID, which is most of the benefits nowadays are interrelated with each other. They're locked to together. A high deductible healthcare plan requires that someone has the need for an emergency savings fund, to the extent that you have a healthcare event, that could be a burden on a family. We understand a lot of relationships between, you know, retirement plans and other benefits that are offered there. So what we're really learning is, is how interconnected benefits are to each other. And that employers are thinking of them now more as a package, that a bunch of things that they offer to them. And I think the one thing that, that we are seeing from our employers is a request for assistance at the employee level about how to knit together a custom benefit program for them, the combination of health and wealth. So for me, lifetime income is critically important. A retirement plan is one of the best ways to be able to do that. But I also think it's the package that allows you to optimize your retirement plan. And that includes health solutions, protection solutions, and other types of investment vehicles that can help participant accomplish their goals. Jeff,

Speaker 2:

I just wanna say, thank you again, you you've given us, uh, and our listeners, just some great insight. And I wanna thank you again for joining us today.

Speaker 4:

Thank you.

Speaker 3:

Hey Jeff. I want to echo Heather's thanks and certainly appreciate time. It's it's great to see you again. And as Heather mentioned in it, I mentioned beginning the show. I wanna wish everyone a happy new year. We look forward to updating you with more valuable insights on many more episodes ahead in 2022. So as always, thanks for joining us today. And I hope you stay well.

Speaker 1:

This information is provided by voy for your educat only Neith, the Voya nor representatives offer tax or legal advice. Any opinions expressed within do not necessarily reflect those of the Voya family of companies or its representatives and are not intended to provide specific advice or recommendations for any individual plea, insult your tax or legal advisor before making a tax related investment or insurance decision products and services offered through the Voya family of company. These.