Planning with Annuities Based on Retirement-Income Styles

This white paper discusses the Retirement Income Style Awareness® (RISA®) tool, which assists financial professionals in developing sustainable retirement income strategies tailored to individual client preferences. The RISA® tool identifies two primary factors: Probability-Based versus Safety-First and Optionality versus Commitment Orientation. These factors help determine a client’s preferred approach to retirement income, whether it be reliant on market growth or contractual guarantees. The paper emphasizes the importance of aligning retirement strategies with client preferences to avoid ineffective planning. It also highlights the role of annuities in providing tax deferral and lifetime income, particularly for clients who may not be comfortable with an investment-only approach. The author, Dr. Wade Pfau, outlines how understanding these preferences can lead to better retirement outcomes and discusses the implications of various retirement-income strategies, including the use of annuities as a means to fill income gaps.