Proprietary Products
Much ado has been made on the current negative U.S. savings rate and the fact that most future retirees – particularly the late boomers and Gen X – will not have invested enough to replace their income needs in retirement. The smaller size of these nest-eggs can be augmented through the use of mortality-linked products. The example below illustrates how the most common mortality-linked product - a life-contingent immediate annuity – can reduce the level of asset required to meet a given income goal.
Example
Situation: A man determines he needs $2,900 per month for life beginning at 65*
Option 1: Purchase that income stream for about $410,000 by buying in a fixed, immediate life-contingent annuity.
Option 2: To avoid giving up “control” of his assets, he would need to have saved an additional 80% - over $760,000 - if he wanted a 90% chance of not running out of money by the time he was 90** (which could well be shorter than the rest of his life).
*According to a quote received from www.immediateannuities.com on 27 October 2006, a 65 year old man in Connecticut purchase an immediate annuity for $411,034 and receive $2,900 per month for life.
**According to the T. Rowe Price Retirement Income Calculator (http://www3.troweprice.com/ric/RIC/), if a 65 year old married male wanted to take $2,900 per month in withdrawals and have a 90% chance of not depleting his nest egg, he would need $763,250 invested in a portfolio that was 60% stocks, 30% bonds, and 10% short-term securities.
Through a mix of traditional and proprietary products, String ™ allows participants to balance the competing priorities of spending desires, longevity concerns, and the hope of leaving something to their heirs. In addition to making immediate annuities available to participants through its insurance partners, String has developed two proprietary products; String Longevity Protector™ and StringIncome™.
String Financial’s Longevity Protector™ provides protection against inflation and longevity risk. It can be thought of as the complement to term life insurance in that instead of paying your beneficiary when should you die, it pays you if you live (and the longer you live the more it pays).
The StringIncome™ is low-cost variable annuity product that guarantees a 5% annual return on each dollar invested regardless of actual account performance if the participant elects to annuitize their contract. Payouts can be fixed, variable, or a combination to provide maximum flexibility.
Proprietary Products
Longevity Protector™
StringIncome™
Advice
StringAdviser™
StringAdviser Process™
StringSimple™
BrokerConnect™