The quest for retirement income
By Laura Bruce • Bankrate.com

For many workers the vanishing defined benefit plan, or pension, means the top retirement goal is finding a way to generate cash through 20 or 30 years of life without a paycheck. Millions of baby boomers are hoping they'll be able to come up with enough income so that, when paired with Social Security, they will be able to continue their pre-retirement lifestyles.

Fixed and variable annuities, tax-deferred insurance products that can convert an investment into a cash stream after retirement, are popular options for providing income. But many companies in the financial services industry are looking for newer and better ways to do this -- some with annuities and some outside of annuities, which have long been the purview of insurance companies.

Robert MacDonald, CEO of Allianz Income Management Services, which was founded by the insurance company Allianz of North America, says the insurance industry is lagging behind the investment community in terms of coming up with innovative investment products to meet retirement needs.

"The insurance industry is taking an old product, a single-premium immediate annuity, which was developed decades ago primarily to provide income for what was referred to as widows and orphans. They're putting some chrome on it and touting it as a great new product. We need new products, a whole generation of products that go beyond the simple step of providing income."

MacDonald says he believes that consumers are worried about four things.

Retirement concerns:

• Having enough income to last the rest of their lives. • The long-term impact of inflation. • Catastrophic illness. • Leaving legacies to their children.

Although there would be regulatory and tax issues to resolve, he is working on a product that he says would cover all bases. "An insurance company can say, 'Give me $400,000 and I'll give you $30,000 for 20 years. I'll protect you against inflation, I'll protect you if you get sick, and when you die I'll (give money back) that can be used as a legacy transfer.' Only an insurance company can do that, and those benefits are possible today."