The Strongest Leg of the Stool

Sep 15, 2021

When I started my career on Capitol Hill, I was told that my retirement nest egg would resemble a three-legged stool, with my pension, Social Security and personal savings as the pillars.

But when I talk to my young adult children about planning for their retirement, I have to warn them that the old stool theory has become wobbly.

Traditional pensions in the private sector are extremely rare. And last month’s report about the Social Security Trust Fund being depleted by 2033 didn’t boost any young person’s confidence.

Fortunately, the personal savings leg of the retirement stool remains strong. And the life insurance industry is uniquely positioned to help young people – and people of all ages, for that matter – prepare for their retirement.

Life insurance companies offer annuity products that provide people with guaranteed income they cannot outlive. The availability, accessibility, and affordability of annuities can help all Americans, regardless of their race, gender or economic status, live and retire with financial peace of mind.

Guaranteed income for life isn’t something that many 20-year-olds are really thinking about. But when you tell them that their retirement may last 20 or 30 years or longer, then it sinks in.

My advice to my kids – and all young people planning for retirement – is to stay engaged and aware of the options in the marketplace and the actions by lawmakers. But they should focus their efforts on what they can control.

Save early. Save often. And save wisely.

Most full-time American workers have access to a defined contribution retirement plan at their workplace. But too many do not, especially employees and small businesses and part-time workers. That’s why the life insurance industry supports the automatic retirement plan included in the retirement subtitle of the reconciliation bill. This is a forward-thinking solution that makes key strides to close the access gap while promoting market-based solutions that encourage Americans to develop greater personal savings.

There are ways to turn personal savings into a predictable income stream like a traditional pension. And the income from annuities can be used to supplement Social Security – providing a second source of steady, guaranteed monthly lifetime income to cover expenses. Annuities can also serve an important role as a bridge between retirement and claiming Social Security. 

If there’s anything the COVID-19 pandemic has taught us, it’s that no one can predict what the future will hold. But everyone can and should prepare for it. America’s life insurance companies can provide accessible and affordable ways for all Americans to prepare for lifetime financial security.

Susan K. Neely

Susan K. Neely is the President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drives public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families.