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Financial Services Technology Platforms Help Retirees Create Lifetime Paychecks

Financial Services Technology

Financial Services Technology Platforms Help Retirees Create Lifetime Paychecks

Financial services technology innovations are making it easier for workers to solve for a very important problem: how to turn a lifetime of savings into a steady stream of income in retirement. CNBC recently shined a spotlight on a pair of new financial services technology tools that can help workers address the retirement income dilemma.

Throughout their careers, workers are told repeatedly to save for retirement. But what happens when they get to their post-work years? How do they access the savings they’ve worked so hard to accumulate and turn that pile of money into a steady paycheck for life? It’s a problem that, thus far, doesn’t have a great solution. Financial services technology may be poised to change that.

Withdrawal rules of thumb, such as the “4% rule,” which is used to determine how much retirees should withdraw from their retirement savings each year, confound most retirees. They’re also not one-size-fits-all. Every retiree’s situation is different, and while a 4% withdrawal strategy may be sufficient for some, others may have different needs. And where does Social Security fit into the picture? Retirees are completely befuddled by figuring out which retirement accounts to draw from, and which assets to tap first.

There are a few new financial services technology platforms emerging on the scene to help retirees answer those complex questions. One such financial services technology is Income Strategy, which is designed to help individuals figure out which accounts to make withdraws from and when.

Flubbing a withdrawal sequence can have dire consequences for retirees. For example, one out-of-turn Individual Retirement Account (IRA) withdrawal can impact a retiree’s Social Security taxes, as well as their Medicare premiums. On average, managing a withdrawal sequence correctly using financial services technology can make someone’s savings last up to seven years longer, according to Bill Meyer, Income Strategy’s founder, and CEO, who was quoted in the CNBC article.

Income Strategy is a financial services technology website that aims to make the withdrawal process easy. The site helps users to determine what assets to sell based on the amount of money they need. Income Strategy offers a tiered subscription model, which offers users a variety of benefits of financial services technology, from the ability to execute transactions on their own or have them executed on their behalf to gaining access to advice from financial professionals and low-cost exchange-traded fund (ETF) models. Income Strategy is a financial services technology that’s meant to be an alternative to professional financial advice and caters to individuals who don’t want to pay a fee for this advice.

Another financial services technology platform, called Kindur, is aimed at removing the complexities of creating a drawdown strategy for retirees. It does this by helping them create a steady retirement paycheck. When users sign up, they provide basic financial information, such as how much they have in pre-tax vs. taxable accounts. Kindur is a financial services technology platform designed to help automate how much of their assets users withdraw, and from which accounts. The company sends individuals their checks directly, to help augment the income received from Social Security and other income sources.

Kindur also offers an annuity product, but there’s no commissions or brokers. The financial services technology company also manages a portfolio of ETFs as a registered investment advisor (RIA) in collaboration with firms such as Schwab and Fidelity. Consumers can decide how much risk they take on based on their guaranteed income. Kindur charges a 0.5% fee annually on any assets managed.

Although these financial services technology platforms are still fledgling offerings, they are a step in the right direction when it comes to helping retirees determine how to create a paycheck for life from their existing assets. More such financial services technology developments are likely to join the fray in the near future. Plan sponsors who are concerned about retaining plan assets while helping retirees create a steady stream of income in their post-work years should continue to pay attention to continued innovations in the financial services technology space.




       “financial services technology”

Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk

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