Having enough to retire comfortably

Kevin Hogan CEO, Life & Retirement division AIG

Kevin Hogan is chief executive of insurer AIG’s Life & Retirement division, where he oversees the firm’s individual retirement, life insurance business and more. He recently spoke with The Associated Press about longevity, financial anxiety and other issues surrounding retirement in the U.S.

AIG recently conducted a survey of more than 1,000 people — all over 40 — and found that more than half of them wanted to live to be 100. Did that surprise you?

You know, it sort of did in a way but also, I was optimistic about that result. I think it’s a reflection of the improvements in health care and lifestyle and awareness. But it also didn’t necessarily surprise me because there’s been such a growing momentum in recognizing the implications of increased longevity and what people can do earlier in life to prepare for that.

This idea of living longer can stir up financial anxiety for folks though, can you talk about what that looks like?

It’s quite interesting as we think about ‘What does the new definition of holistic wellness look like?’ The implications from anxiety about uncertainty about the future can have an impact on physical and mental health. And of course, you know a solid financial plan that anticipates the reality of a longer lifespan is something that can help address that anxiety, which in and of itself will lead to a more holistically healthful, longer life.

Where do you see most people going wrong in retirement planning?

I would say there are certain basic practices that everybody can adopt in terms of being thoughtful about having a savings plan, taking advantage of all the available benefits from their employer, making sure to be aware of and take advantage of tax benefits, as well as maintaining discipline.

But I think that one of the things that people run into that comes as a bit of a surprise is that there’s a lot of focus on savings. With the demise of defined contribution plans, people have to save for themselves. And the emphasis is on savings, savings, savings. But the reality is, when you get to that point where you have to convert a lump sum into a lifestyle it’s something that people find very difficult to do.

Thinking about just the savings part as opposed to what happens after savings is one of the big challenges that people can run into because after 45 years of thinking “I can’t touch my 401(k) or IRA money” it’s very hard to switch gears all of a sudden.

You’ve talked about how annuities help with distribution, but is that too complex?

We find that people that choose to work with a financial professional are actually much more comfortable and confident. It can supplement what people can do for themselves with a well-articulated plan and understanding of the tools because it is complex and every individual’s situation is different.