By Dan White

Lately, a reoccurring conversation I have with fellow advisors is about income. As the masses of Baby Boomers are entering into retirement, there are constant questions that lead the conversation, “How do I replace my current income?” and “How is it going to last as long for a lifetime?” There is a critical need for the consumer to know how their lifestyle is going to be affected after they stop working.

When a potential client walks in, it is your job, as a trusted advisor, to present the facts and put their minds at ease. Remember they are coming to you, because you are the trusted advisor. They come to you for a solution, a plan, and reassurance that their future is in order.

An income rider is usually a big part of the puzzle. However there are so many choices out there with different features and benefits. There are three different categories income riders fall under:

Maximum Income – This can guarantee a steady, reliable, income stream for life even if the policy reaches zero. This has a higher withdrawal rate, however it is designed for people who need to maximize their income now. This is very likely for individuals who don’t have a pension and they are relying on this rider for their sole income.

RMD Solution – This is a death benefit rider to make up for the required minimum distribution (RMD) that will allow the entire IRA to be passed on to the kids intact.  This is generally a rider for people who don’t need the money; they’ve saved properly throughout the years. This type of rider will generally grow 4% a year.

Nursing Home Income Tripler – This is for people who, perhaps, cannot qualify for long term care. With this rider they can triple the income payout when confined to a nursing home. I recently had a case in which the wife had been diagnosed with Parkinson’s disease and the husband was 10 years older than her. His concern was that he wouldn’t be around to care for her. He put a substantial amount into an annuity, so if the scenario he envisioned came to fruition and she ended up in a nursing home she would be able to receive triple the income for up to five years.

The following is a list of questions I ask my clients before making the proper determination to guide them in the right direction:

1. If you had to go back to work, could you? Would you? Would your spouse?

2. When do you plan on taking social security? What about your spouse?

3. Do you have any children who are financially dependent on you?

4. Do you have any medical concerns that could be costly to you?

5. Do you have traditional health insurance?

6. Do you have Medicare?

7. Do you have a Medicare supplement plan?

8. Where will you live when you retire? Are you considering downsizing?

9. Will you want to travel? If so, how often?

10. Does longevity run in your family?

None of the proposed questions has anything to do with account values or desired incomes. Of course, that is by design. If the only question asked is how much do you have and how much do you want, you really could be missing critical elements needed to create a sound income plan. The goal should always be to help the client, keeping their best interests in mind at all times. I compare it to a good doctor: they get all the facts; make the diagnosis, then offer the prescription.

When a client walks away from a meeting, make sure they walk away comfortable, confident and resolved to work with you. Align your solutions with your client’s needs and everything will fall into place.


Dan White, Financial planner owner of Dan White & Associates, out of Glenn Mills PA. Dan has been advising clients since 1987 and has been featured in the Philadelphia Enquirer as well as US News & World Report, Fox Business, Wall Street Journal and CNN Money. For more information, call 800-228-5964.