Reclaiming the Future

Our Mission: Allianz Life is the leading innovator of financial solutions for consumers who want protection, income, and the guidance of a trusted financial professional.ENT-1067 (12/2010) ©Copyright Allianz

Allianz Life Insurance Company of North America

Reclaiming the FutureYour hope ahead

2

Meet Bob

Early 50s Divorced with two grown children Recently lost his job at the high school Working two jobs to make ends meet Significant credit card debt Feels unprepared for retirement Not sure if or when he’ll be able

to retire Says he is in “survival” mode

This scenario is for illustrative purposes only and does not represent an actual Allianz client.

3

The Allianz Reclaiming the Future Study

Larson Research and Strategy Consulting, Inc. and DSS Research fielded a nationwide online survey for Allianz among 3,257 U.S. adults, age 44 to 75.

We surveyed 1,642 U.S. households because boomers are facing one of the most pronounced retirement income challenges in history.

Life expectancy is increasing; people are living longer in retirement.

And reliable sources of income from the past, such as defined benefit plans and Social Security, are becoming less and less reliable.

4

Agenda

1 You are not alone.

2 The changing face of retirement

3 Americans are seeking retirement solutions

4 What is your financial personality?

5 Your hope ahead

5

You’re not aloneAmericans fear outliving their retirement assets

6

You have concerns

“Overwhelmed” financial personalities like Bob represent 32% of the boomers surveyed.

61% of boomers said they fear outliving their assets more than they fear death.

57% said they are worried that their nest egg may not be large enough for retirement needs.

47% fear they will not be able to cover their basic living expenses in retirement.

The Allianz Reclaiming the Future Study, 2010.

7

You’re not alone

Almost a third (31%) describe themselves as somewhat to not at all clear in terms of exactly what their expenses will be in retirement.

This number jumps to 57% among those in their late 40s.

Even 36% of the affluent are uncertain what they will need for their retirement.


8

Retirement portfolios underestimated

Estimates of retirement portfolios are off by a factor of nearly three times too small.

The median income boomers say they will need is around $60k. Assuming a standard 4% draw, this would require a $1.5 million portfolio.

The median size of portfolio boomers say they will need is around $540k.


9

The changing face of retirementLearning from The Allianz Reclaiming the Future Study

10

54% 54% 56%

10.6% 15.2% 9.7%

27.6%10.6%

3.5%

7.8%20.2%

30.8%

1980 1993 2006

Neither Both DB only DC only

Changes to defined benefit plans

1 Notes, February 2009, Vol. 30, No. 2, www.ebri.org.2 “The Financial Crisis and Private Defined Benefit Plans,” Center for Retirement Research at Boston College, November 2008.

2221

11

Social Security is no longer reliable

Ratio of workers to beneficiaries

2005:

2025:

1 beneficiary1950:

1 beneficiary

1 beneficiary

"The 2009 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds," May 12, 2009.

16.5 workers to …

3.3 workers to …

2.3 workers to …

12

Economic downturns affect our retirement

The economic downturn was a big wake-up call.


Experience during downturn1. Saw my net worth drop significantly

in a very short period (53%) 2. Home value dropped

substantially (43%)3. Realized I was much less in control of

financial destiny than I thought (41%)4. Real possibility of outliving

assets (28%)5. Can’t rely on 401(k)/pension plan

as primary retirement assets (27%)

13

Retirement strategies often change

For some, the downturn made them feel their retirement plans went “out the window.” 20% of boomers in their late 50s

realized their calculations for how much money they’d have at retirement were now totally wrong.

18% of affluent felt like their whole retirement plan went “out the window.”


14

Americans are seeking guaranteed retirement solutionsAnnuities are gaining relevance and appeal

15

Guaranteed retirement solutions

Survey respondents told us that:

Safety of retirement nest egg is desired over high returns. Guarantees are more attractive than high returns.


16

What’s your ideal financial product?

Most important features people want in an “ideal” financial product


Top 5 responses:1. The ability to support a stable,

predictable retirement standard of living

2. Guaranteed income stream for life3. Guaranteed not to lose value4. Protect against market downside5. Don’t need to worry or think about

what it does

17

Why not retirement income insurance?

Financial risks transferred away

Types of insurance Portion of risk transferred Probability

Life insurance Chance of death 0.9%1

Car insurance Chance of car accident 2.8%2

Homeowners insurance Chance of house fire 0.3%3

1 2001 CSO Table, www.actuary.org/life/cso_0702.asp. Accessed September 2010.2 Percentage is calculated from U.S. Fire Administration, “Residential Structure Fires,” www.usfa.dhs.gov/statistics/national/residential.shtm and American

Housing Survey for the United States: 2007. Accessed September 2010.3 Percentage is calculated from U.S. Department of Transportation National Highway Traffic Safety Administration, “2008 Traffic Safety Annual Assessment –

Highlights,” Traffic Safety Facts, June 2009 and Fatality Analysis Reporting System (FARS) Encyclopedia 2008, www-fars.nhtsa.dot.gov/Main/index.aspx. Accessed September 2010.

18

Annuities as retirement insurance

Annuities are seen as similar to retirement insurance. Like insurance for part of your retirement nest egg (45%) All you have to do is leave it alone and it will do the work (38%) Great way to create an individual retirement vehicle (36%) Balances out other risky investments (31%) Great way to save money (26%) Some even see it now as more attractive than a 401(k) (8%)

Note: Annuities are insurance products and not pensions. They are not subject to the protections of ERISA.The Allianz Reclaiming the Future Study, 2010.

19

Many annuity owners like their product

19

Very happy with their annuity.

Like annuities very much.

74%

76%Q80: What is your general opinion of annuity products, where “1” means I

don’t like them at all and “6” means “I like them a lot”?Q97: How happy are you with your annuity, where “1” means “very unhappy”

and “6” means “very happy”?The Allianz Reclaiming the Future Study, 2010.

20

Top reasons boomers like annuities

Reasons why they like their annuity Safe, long-term product with modest returns (57%) Great way to supplement Social Security or other retirement

income (56%) Way to get tax-deferred interest on part of nest egg (56%) Can be protected from stock market declines (50%) Allows earned interest based on movement of market (36%) Opportunity for earned interest without market volatility (29%)


21

29%

29%

35%

7%

Today’s annuities are not yesterday’s annuities

However, little time has been spent on learning about annuities.

Once in a while have looked at

and updated knowledge

Kept fully knowledgeable about the product

Occasionally have heard something but have not researched them

Not really looked into them since formulating opinion about them


22

You are not alone.

However, your situation is unique.


23

What is your financial personality?The study revealed five unique segments

24

Five financial personality segments

Resilient

27%“Deep down, I realized things would never be the same in terms of financial security.”

Overwhelmed32%

“Financially speaking, I am pretty much in survival mode.”

Iconic

20%“I’ve worked hard and invested wisely for my retirement security and I am enjoying it.”

Distracted

7%“I am happy to live in the moment with a full house and a full life.”

Savvy

14%“I watch the markets and manage my investments.”


25


Overwhelmed – 32%

Unprepared for retirement, you are feeling overwhelmed. You expect to have to reduce your living expenses in retirement, and you’re counting on Social Security for retirement income. You feel like you are in “survival mode.”


26


Iconic – 20%

You are confident your income will last through retirement. You feel that you have prepared well for the future. You may have reduced some of your spending, but you have a handle on your retirement expenses. You believe in the “American Dream.”


27


Resilient – 27%

You exhibit a “take charge” attitude. You’ve planned ahead and value your independence, but you are planning on investing, working longer, or supplementing your Social Security with some other form of income. You are concerned about outliving your income.


28


Distracted – 7%

You have seen your net worth drop significantly. However, you haven’t changed your retirement plans or reevaluated your overall financial strategy. You are worried that your savings will not be adequate for retirement, but you don’t have a plan for growing those savings.


29


Savvy – 14%

You are either living comfortably in retirement or will retire comfortably. You are financially independent, comfortable taking risks, and confident that your income will last throughout your life. You have a large, diversified portfolio and few financial concerns.


30

Your hope aheadNext steps toward your retirement future

31

Your hope ahead.

Talk to your financial professional.

Read the Allianz Reclaiming the Future consumer brochure (ENT-1067).

Take the financial personality questionnaire (ENT-1039).

Ask if insured retirement solutions are right for you.

ENT-1067

ENT-1039

32

Summary

1 You are not alone.

2 The changing face of retirement

3 Americans are seeking retirement solutions

4 What is your financial personality?

5 Your hope ahead

33

Allianz Life Insurance Company of North America (Allianz)

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. For variable products, guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

Not FDIC insured • May lose value • No bank or credit guarantee • Not a deposit Not insured by any federal government agency or NCUA/NCUSIF

Products are issued by Allianz Life Insurance Company of North America. Variable annuities are distributed by Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Product and feature availability may vary by state.

34

Thank youAny questions?

Reclaiming the Future

Documents

Transcript of Reclaiming the Future