Know the ants and grasshoppers in your book of business
Meet an ant: Andy
Meet a grasshopper: Greta
Build confidence through key retirement decisions
Know the ants and grasshoppers in your book of business
According to Aesop's fable, ants gather food to prepare for winter while grasshoppers have fun instead. Likewise, clients generally fall into one of two groups based on their spending behavior:
- "Ants," or savers, tend to spend less than their income.
- "Grasshoppers," or spenders, tend to deplete what they earn and sometimes more.
While the fable is a lesson on frugality, both ends of the spending spectrum can create potential risks when carried into retirement. That's why it's so important to take the time to understand your client and learn about their habits for saving and spending.
Old habits are hard to break, and this is especially true for spending behavior over a lifetime. People tend to carry spending habits from their working years into retirement and become used to a lifestyle that's difficult to adjust, even when financial circumstances change.1
Once you uncover spending behaviors and risks your clients haven't considered, you can offer a solution that adds more security to their retirement strategy. Get started by considering two clients — one an ant, and one a grasshopper — and the different risks they face. Learn how both can build more confidence and spending freedom with a guaranteed income solution.
Meet an ant: Andy
The scenario: Andy always spends less than his income. The financial safety net he's accumulated gives him a sense of safety and control. Andy's used to a lifestyle of careful spending on a few high-value purchases, like his home. He'll maintain his frugal habits in retirement out of complacency and fear that he'll run out of money during his lifetime.
The risk: Underspending could lead to Andy leaving a larger financial legacy to his heirs than he intended, also called an "unintended bequest." Even though it sounds like a positive thing, this situation could potentially lead to unexpected tax complications for his beneficiaries. Not only that, he also might regret missing out on experiences and purchases he could afford.
The opportunity: Studies show that leisure spending — like eating out with friends, hobbies and going on vacation — provides significantly more happiness than other purchases that appear more practical.1 Andy needs to feel he has freedom to spend more on leisure without worrying about running out of money in his lifetime.
The solution: Andy's financial professional helps him use some of his retirement savings to create a source of guaranteed income. An annuity with a lifetime income benefit delivers a predictable and protected income stream — so he can spend his other savings more confidently without fear he'll outlive his money.
Meet a grasshopper: Greta
The scenario: Greta spends money to enjoy life and often splurges on hobbies, dining out and travel. She tends to spend up to the limit of her income. Greta hopes she's saved enough to maintain her lifestyle in retirement. She would have difficulty changing her habits due to a drop in income.
The risk: Overspending could derail Greta's retirement strategy if she experiences an unexpected loss of savings. A market decline, health condition or other unplanned event may require her to cut spending or risk running out of money.
The opportunity: Greta needs guidance on how much she can safely spend. By staying within a set limit, she can maintain her lifestyle and enjoy spending money with more confidence.
The solution: Greta's financial professional helps her create a guaranteed income stream using an annuity with a lifetime income benefit. Even if the contract value falls to zero, she can count on this source of income for life and plan her spending limit around this amount. The annuity also has built-in features to help her financially prepare for unexpected health and life events.
Build confidence through key retirement decisions
Whether you're working with an ant or a grasshopper, we're here to help you give your client understanding and confidence that leads to stronger relationships. Offering guidance on spending risks is just one part of helping them approach their retirement strategies. You can find resources to help you address other considerations on our Retirement Risks page.
As you guide clients through more of their key retirement decisions, explore additional topics that can influence their strategies:
Annuities offered in all states except New York by Protective Life Insurance Company (PLICO), Nashville, TN. Annuities offered in New York by Protective Life and Annuity Insurance Company (PLAIC), Birmingham, AL. Variable annuities distributed by Investment Distributors, Inc. (IDI), a broker-dealer and principal underwriter of registered products issued by PLICO and PLAIC, its affiliates. IDI is located in Birmingham, AL.
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