Let’s protect ourselves from underfunded pensions.

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Pensions are no longer the norm.

When it comes to retirement planning and retirement security, there are few things more comforting than a traditional (defined benefit) pension. Since pensions provide a steady stream of income for the rest of our lives, they help protect us from two of the greatest risks to our future security:
1) possibility of outliving our money, and
2) potential loss of principal.

In fact, a pension was once considered so important that it, along with Social Security and personal savings, became known as the “three-legged stool of retirement.”

Unfortunately, however, the pensions millions of us are counting on to help fund our retirements may not be as secure as we think. So what should we do if we are concerned about our pensions? While no one knows what the future will bring, there are some steps we can take to protect ourselves in case our plans are frozen or terminated, or our benefits are reduced.

The pension landscape is changing.

According to a recent study conducted by Towers Watson, several of the nation’s largest corporate pensions do not have enough money to meet their current obligations. In fact, their analysis of Fortune 500 companies found a total pension deficit of $343 billion.1

Even government pensions—often regarded as the safest of all—are facing insolvency due to a combination of low interest rates, increased longevity, and a growing number of workers entering retirement. In 2013, Moody’s Investors Services reported that at least 10 states have public pension liabilities that are equal to, and in many cases exceed, their total annual revenues.2 What’s more, Joshua D. Rauh, a finance professor at Stanford University, estimates that state pensions are currently underfunded by a combined $4 trillion.3

More lifetime income means more peace of mind.

More and more, people are seeking the guarantees for retirement income they thought their pensions would provide. For many of us, a Guaranteed Lifetime Income Annuity issued by New York Life Insurance and Annuity Corporation (NYLIAC) can be an effective way to supplement our pension benefits, and to ensure we have enough income to live comfortably in retirement. That’s because these products provide monthly income payments that are guaranteed to last our entire lives—no matter how long we live.4 But, unlike pensions, we own these products outright, and the benefits they provide are backed by NYLIAC, which has received the highest financial strength ratings currently awarded to any life insurer by Standard & Poor’s (AA+); A.M. Best (A++); Moody’s (Aaa); and Fitch (AAA).5

Under the right circumstances, a New York Life Whole Life insurance policy can also be a potential source of retirement income. How? While the primary purpose of whole life insurance is to provide death benefit protection, as policyowners, we can withdraw funds or borrow from the accumulated cash value anytime.6 If we no longer need the full death benefit, we can use this money to overcome an unexpected financial emergency, or access it periodically to enhance the quality of our retirement lifestyle.

If you would like to know more about life insurance, lifetime income annuities, or other ways to help build a more secure retirement, talk to a New York Life agent. We’re here to help.

1 “Corporate Pension Plan Funding Levels Declined in 2014, Reversing Much of 2013 Gains, Towers Watson Analysis Finds,”, January, 5, 2015.
2“Public Pension Costs Swamp Revenues of 10 U.S. States—Moody’s,”, June 27, 2013.
3“Public Pension Tabs Multiply as States Defer Costs and Hard Choices,” The New York Times, February 24, 2014.
4Guarantees are subject to the claims-paying ability of the issuer. Please note that pension payouts consist of interest, return of premium, and mortality credits. This product is only available in jurisdictions where it is approved.
5Source: Individual Third-Party Ratings Reports as of 3/26/15.
6Loans and withdrawals reduce any available policy cash value. In addition, loans against a policy accrue interest at the current rate and decrease the death benefit by the amount of the outstanding loan and interest.

In Oregon, the New York Life Whole Life policy form number is ICC12213-50. For most jurisdictions, the policy form number for the New York Life Guaranteed Lifetime Income Annuity is ICC11-P102 (it may be 211-P102).

This article is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your tax, legal, or accounting professional before taking any action.



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