Presentation to 

Federal Advisory Committee on Insurance

Robert A. Kerzner

President and CEO

LIMRA, LOMA, LL Global
The Trusted Source for Industry Knowledge

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2
3

Nearly

years in existence

More than

research reports published

data points collected annually 

Over 

individual consumer 

records collected annually

At least
4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

40 45 50 55 60 65 70 75 80 85 90 95 100

Retiree population (millions)

Age

PROJECTED NUMBER OF RETIREES

48.6 million

in 2014

66.4 million

in 2025

82.1 

million 

in 2040

Source: LIMRA Secure Retirement Institute analysis of U.S. Census Bureau population projections.

By 2040 there will be 82 million retiree in the U.S.
5

$0

$1

$2

$3

$4

$5

$6

<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95+

Age of HH

No one in HH retired

Partially retired HH

All in HH retired

Financial Assets by Age and Retirement Status

Show Me The Money

$17.8 T

$14.8 T

$8.4 T

In trillions

Source: LIMRA Secure Retirement Institute analysis of 2013 Survey of Consumer Finances, Federal Reserve Board, 2014
Retirement income opportunity will double to 

nearly $22 trillion by 2020

6

Source: LIMRA, Based on 2001, 2007 and 2010 Survey of Consumer Finances, Federal Reserve Board and U.S. Census Bureau’s Current Population Survey, 

March 2011 Supplement. All estimates and calculations reflect consumer segments of age 25 or more, and households with assets between $50K and $4.9M. 

Household HH by age group growth has been estimated by using Census projections by age and assuming that the proportion of HHs that have between 

$50,000 and <$5 million is constant within age group over time and the proportion in equities remains constant within each age group over time

Asset Gathering

Retirement Assets

2010

2020

$0.4 trillion

0.6 trillion

Early Career

Age 25 -34

Investable Assets

$1.7 trillion

$2.5 trillion

Mid Career with Kids

Age 35 -44

Investable Assets

$4.3 trillion

$5.6 trillion

Kids in College

Age 45-54

Investable Assets

$6.1 trillion

$10.2 trillion

Pre-retiree

Age 55-64

Investable Assets

$5.9 trillion

$11.4 trillion

Retired

Age 65+

Investable Assets

The Retirement Income 

Opportunity

65% of 

assets

56% of 

assets
7

Only 1 in 5 Americans under 50 have 

a defined benefit plan

For those with a DB plan:

...more and more likely to be frozen, and 

...represent smaller and smaller wage replacement rates

9%

17% 16%

20% 22%

29%

35%

45%

55%

50% 52%

57%

<30 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+

Percentage of Households with Defined Benefit (DB) Pension

Younger households are less and less 

likely to have DB Plans

Age of oldest spouse

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute, (will be published in 2015)
8

0

100

200

300

400

500

600

700

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Number of Defined Contribution Plans

Number of Defined Benefit Plans 

Source: Department of Labor Private Pension Plan Bulletin Historical Tables and Graphs, December 2014, 

Table E1

Thousands

NUMBER OF PLANS 1975 – 2015

Today the individual is responsible for 

their retirement security
Majority of Retirement Assets in IRAs or DC Plans

1 1.7 1.4 1.6 1.8 2

3

4.4 3.6 4.2 4.4 2 5.2

2.6

2 2.5 2.7

3.2

3

4.6

3.6

4.8 5.3

6.8

2.6

4.7

3.7

5

7

7.4

2000 2007 2008 2010 2012 2014

Annuity reserves Gov't DB plans

Private sector DB plans DCplans

IRAs

58%

53%

53%

Dollars in Trillions

Source: The U.S. Retirement Market Fourth Quarter, Investment Company Institute

58%

51%

32%
RETIREMENT RISKS:

10

 Few have saved enough 

systematically

 Longevity
1 of 4 Americans age 65 will live into their 90s

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute, (will be published in 2015)

11

86

93

89

95

50% 25%

PROBABILITY OF 65-YEAR-OLDS SURVIVING TO SELECT AGES

Men Women
12
Longevity – life expectancy goes up as 

people age

13

Source: CDC: Health, United States, 2012

78.8

84.3

87.4

74 76 78 80 82 84 86 88 90

At birth

If you live to 65

If you live to 75
87%

80%

75% 73%

2001 2006 2012 2013

Not concerned about outliving assets

14

Retirees Remain Unconcerned About Longevity

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute (2012, and 2015 – to be published)
15

Advisors’ perceptions of retirement risks are 

nearly the opposite of retirees/pre-retirees

Importance Pre-retirees Retirees Advisors

❶ Public policy Public policy Health care

❷ Inflation Inflation Longevity

❸ Health care Market & Investment Public policy

❹ Market & Investment Health care Inflation

❺ Longevity Longevity Market & Investment

Source: LIMRA Secure Retirement Institute, 2015. Based on findings from Advising for tomorrow; Advisor Perspectives on Retirement Planning, LIMRA, 2012 

that surveyed 1,042 advisors who have been in their field for more than a year, and LIMRA Secure Retirement Institute Consumer Study, 2014, results 

based on analysis of 888 retirees and 547 pre-retirees with $100K+ in household assets. 
Top goal for retirement: Have enough money to 

last a lifetime

16

41%

25%

12%

8%

18%

22%

14%

6%

12%

10%

10%

12%

17%

13%

7%

12%

11%

13%

6%

6%

Have enough money to last your lifetime

Remain financially independent

Stay and live in own home

Spend time with family or friends

Have enough money to pay for medical/...

Pursue your interests and/or hobbies

Have enough money for emergencies

Maintain control of assets

Leave money for heirs or charities

Spend most or all money during lifetime

Most Important Retirement Goals

Most important Second most important Third most important

Note: Based on 2,000 retirees and pre-retirees.

71%

64%

39%

21%

28%

24%

25%

12%

11%

5%
Despite low interest rates, SPIAS 

experience steady growth

17

$2.8 $2.8

$2.1 $2.4

$3.0

$3.6

$4.8 $4.8

$5.3 $5.3

$6.1 $6.5

$7.9 $7.5 $7.6

$8.1 $7.7

$8.3

$9.7

Annual SPIA Sales 

Dollars in Billions

Source: U.S. Individual Annuities survey, LIMRA Secure Retirement Institute . 
Deferred Annuity Sales Take Off

$0.2 

$1.0 

$2.2 

$2.7 

2011 2012 2013 2014

DIA Annual Sales

18

Dollars in Billions

Source: LIMRA Secure Retirement Institute, U.S. Individual Annuities survey 
$2.1 $2.4 $3.0 $3.6 $4.8 $4.8 $5.3 $5.3 $6.1 $6.5

$7.9 $7.5 $7.6 $8.1 $8.7

$10.5

$12.4

$13.7

$16.4

$18.8

$20.4$21.6

Income annuity sales are expected to reach 

over $21 billion by 2019

Source: LIMRA analysis and U.S. Individual Annuity Yearbook 2013, LIMRA, 2015

Income Annuities = SPIA + DIA

Updated March 2015

Pag

e 19

Income Annuity Sales Forecast 

In Billions
20

$114.5

$28.2

$23.0

Guaranteed income $39.8

Principal Protection

Protection + Market growth

Market growth

Investment Objectives

Note : Totals are for retail sales only. This analysis excludes sales in employer plans and structured settlements.

Source: LIMRA Secure Retirement Institute, U.S. Individual Annuities survey

 LIMRA Secure Retirement Institute, VA GLB Election Tracking Survey 

Majority of consumers are buying annuities 

to create guaranteed income

Total Retail Annuity Market Sales by Investment Objectives 2014

In Billions
21

$1 Trillion+

Estimated demand for guaranteed 

income products by 2023 

$750 Billion

Today’s estimated demand for guaranteed 

income products

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute, (will be published in 2015)
22

Source of SPIA avg. buyer age: LIMRA Secure Retirement Institute Guaranteed Income Annuities, 2010. 

Source Average Initial Premium: U.S. Individual Annuity Yearbook 2014, LIMRA Secure Retirement Institute, 2015

Source for Percentage of IRA business: : LIMRA Secure Retirement Institute, U.S. Individual Annuities Survey

SPIA Average 

Buyer Age: 

73

Average 

Initial 

Premium: 

$136,000 

Percentage of 

IRA business: 

50%

SPIA Profile
23

Source of DIA Annuity Average Buyer Age: LIMRA Secure Retirement Institute ARSG Survey #402, March 2014. 

Source Average Initial Premium: U.S. Individual Annuity Yearbook 2014 , LIMRA Secure Retirement Institute, 2015

Source for Percentage of IRA business: : LIMRA Secure Retirement Institute, U.S. Individual Annuities survey, Q2 2014. 

DIA 

Average 

Buyer Age: 

59

Average 

Deferment 

Selected: 

7.5 

years

Average 

Initial 

Premium: 

$147,200 

Percentage of 

IRA business: 

73%

DIA Profile
Variable Annuity Profile

24

VA Average 

Buyer Age: 

59

Average 

Initial 

Premium: 

$91,000 

Percentage of 

IRA business: 

59%

Source: U.S. Deferred Annuity Buyers Attitudes and Behaviors, 2012, LIMRA Secure Retirement Institute

Source Average Initial Premium: U.S. Individual Annuity Yearbook 2014, LIMRA Secure Retirement Institute, 2015

Source for Percentage of IRA Retail business: LIMRA Secure Retirement Institute, U.S. Individual Annuities Survey
25

Source of Index Annuity Average Buyer Age: US Deferred Annuity Buyer Attitudes and Behaviors, 2012

Source Average Initial Premium: U.S. Individual Annuity Yearbook 2014, LIMRA Secure Retirement Institute,2015

Source for Percentage of IRA Retail business: LIMRA Secure Retirement Institute, U.S. Individual Annuities survey

Index Annuity 

Average 

Buyer Age: 

61

Average 

Initial 

Premium: 

$89,400 

Percentage of 

IRA Retail 

business: 

62%

Indexed Annuity Profile
8 in 10 employees would like income options

Desire is stronger with younger and less affluent workers

26

42%

30%

23% 25%

37% 34%

26% 31%

48%

52%

50%

54%

47% 48%

54% 50%

18 – 34 35 – 44 45 – 54 55+ Under

$50K

$50K –

$74.9K

$75K+ All

Percent Agree Employers Should Provide Employees With Ways to Convert Retirement 

Savings into Retirement Income 

Strongly agree Somewhat agree

Age

Household Income

Source: Quarterly Retirement Perspective 2013: Prospects for Income Projections, LIMRA Secure Retirement Institute

Base: 1,089 consumers who work for pay and are household decision-makers. 

90%

82%

73%

79% 84% 82% 80% 81%
Annuity owners are more likely to be interested in 

converting assets into guaranteed lifetime income

13%

28%

36% 31%

51% 49%

Retirees Pre-retirees (age 55 & above) Late Boomers (age 45-54)

Yes, interested

Do not own an annuity Own an annuity

Especially true for those who may not 

have access to a pension

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute (2012)
Less than 4 in 10 retirees have a 

formal, written plan 

Source: Retirement Income Reference Book, 2013 LIMRA Secure Retirement Institute
...3 out of 4 adhere to it.

Of the retirees who have a formal 

retirement income plan...

Source: The Financial Advisor’s Role in Retirement (2009)

LIMRA Secure Retirement Institute
Consumers with a formal retirement 

plan are twice as likely to say they 

are very confident they are saving 

enough for retirement

Source: LIMRA Retirement Study — Consumer Phase, 2013. The study is based upon a population of 1,975 consumers with minimum 

household assets of $100,000 or more. The data includes 888 retirees and 1,087 non-retired consumers.
Pre-retirees who have advisors have done more 

planning than those without an advisor 

58% 56%

52% 50%

42%

18%

30%

39%

32%

23% 24%

40%

Calculated the

amount of assets you

will have available for

retirement

Determined what your

income will be in

retirement

Determined what your

expenses will be in

retirement

Estimated how many

years your assets will

last in retirement

Identified the activities

you plan to engage in

and their likely costs

None of the above

Pre-retiree Retirement Planning Activities Completed

Work with an advisor Do not work with an advisor

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute (2012)
Familiarity with Annuities is Low 

7%

36%

28% 29%

8%

38%

28% 26%

4%

30%

36%

30%

Very familiar Somewhat familiar Not very familiar Not at all familiar

Retirees Pre-retirees (age 55 & above) Late Boomers (age 45-54)

Source: Retirement Income Reference Book, LIMRA Secure Retirement Institute (2012)
Nearly half of Americans are not confident in their 

knowledge about investments and financial products 

33

13%

39%

30%

18%

Very Knowledgeable

Somewhat Knowledgeable

Not Very Knowledgeable

Not At All Knowledgeable

48% say they are not very or 

not at all knowledgeable.

Source: Quarterly Retirement Perspectives 3Q 2013, LIMRA Secure Retirement 
Areas where more financial education 

is needed

34

23%

23%

25%

28%

31%

32%

33%

37%

38%

Managing or paying down debt

Budgeting

Saving advice (how much to save,...

Addressing retirement risks

Estate planning

Investing basics

Asset management (stocks and...

Understanding tax issues

Generating retirement income

Those with incomes 

under $50K are 

more interested in 

education on 

saving, budgeting, 

and managing debt

Source: Quarterly Retirement Perspectives 3Q 2013, LIMRA Secure Retirement 
31%

23% 24%

35%

22%

42%

20%

38%

50%

Men Women No

advisor

Works

with

advisor

Under

$100K

$100K+ Under

$100K

$100K –

$499.9K

$500K+

Base: 1,865 consumers who are household decision-makers.

Gender Work with an Advisor Household Income Household Assets

Who Had High Financial Literacy Scores? 

Source: Quarterly Retirement Perspectives 3Q 2013, LIMRA Secure Retirement 
36

People don’t always do what they know is right...
Auto-Enrollment helps people save

37% 37%

86%

50%

Participation rate within the first 12

months

Participation rate after two years

No auto enrollment Auto enrollment implemented

37

Automatic enrollment can 

increase participation by up 

to 34 percentage points.

Even after 2 years, 

participation is up 

25 percent!

Source: Saving for Retirement on the Path of Least Resistance. Behavioral Public Finance: Toward a New Agenda, 2004
Employer match spurs participation

38

Odds 

Ratio

Employer match 2.84

Household income $100,000 or more 1.71

College graduate or more 1.70

Defined benefit plan 1.33

Employees are nearly three times as likely to participate 

in their DC plan if there is an employer match in place

Source: The Plan Participation Puzzle, LIMRA Secure Retirement Institute, 2010
Using Virtual Games 

to show people their 

“Future Selves”

39 Source: Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self

Jeremy Bailenson, Stanford University

In a 2011 paper, Professor Jeremy Bailenson reported that those who had seen 

their future selves in the virtual mirror subsequently put twice as much money 

into a savings account as those who hadn't. 
Fidelity’s Net Benefits 

lets people see how 

their savings habits 

compare with others’

40
 $-

 $20,000

 $40,000

 $60,000

 $80,000

 $100,000

 $120,000

 $140,000

 $160,000

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95

Portfolio assets

Age of retiree

0% SPIA, 100% managed portfolio

10% SPIA, 90% managed portfolio

20% SPIA, 80% managed portfolio

30% SPIA, 70% managed portfolio

40% SPIA, 60% managed portfolio

Source: LIMRA SRI analysis. Illustration of 1969 to 1993, the worst 25-year period out of 62 possible scenarios since 1926. The portfolio has an asset 

allocation of 42.5 percent large company stocks, 17.5 percent small company stocks, and 40 percent intermediate-term government bonds and is 

rebalanced annually. An annual payout rate of 6.00 percent was based on actual single-life immediate annuity quotes with inflation adjustments for a 

hypothetical 70-year-old male in April 2013. The initial withdrawal amount was $4,500 or 4.5 percent of beginning assets; thereafter annual withdrawals 

were adjusted based on the prior year’s inflation rate. The hypothetical portfolio had a 50-basis-point charge assessed annually (following the withdrawals 

and the investment growth or loss).

Retiree Portfolio Longevity With 

Immediate Annuity
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