"What would you say is the biggest concern your clients face today?" So asked our friend and fellow financial advisor, Kevin, over a recent lunch with colleagues. We suspected from the tone of his voice that he wasn't actually curious about our clients' concerns - he already knew the answer to his own question and was quizzing us.

"I would say oil…oil, Iran and the war in Iraq," said Steve.* (Names have been changed to protect the innocent - and incorrect!)

Kevin smirked. "That's three answers, Steve, but that's okay - they're all wrong." "Market volatility," we chimed in, “and interest rates. Moving rates cause the market to get bumpy."

Kevin shook his head while our colleague Charlie surveyed us with joking patronization. "It's healthcare costs, guys," Charlie explained. "I can barely finish a conversation with a

client without hearing about the cost of insurance and prescriptions. And with clients retiring early, everyone's worried about bridging the gap between quitting work and starting Medicare."

We nodded begrudgingly, certain that Charlie was right on the money.

"You're all wrong," announced Kevin, clearly pleased that in fact none of us had solved his riddle. "I just read an article in Registered Rep magazine that said the number one concern facing retirees today is running out of money. Longevity risk!"

We all looked at him, slightly embarrassed. It seemed so obvious! "You didn't say retirees. You said clients," Steve said.

"What percentage of your clients are retired?" countered Kevin. Steve took a bite of his pasta. We figured Kevin meant that, like us, ninety-plus percent of his clients are retired or within five years of retirement. Kevin continued, "And the most compelling part of the article was that when financial advisors were asked what they thought was their clients' number one worry, fewer than twenty five percent said longevity risk! So my point is, are we focusing on the right things when we sit down with our people? Are we showing them charts and graphs about the price of oil and the direction of interest rates when all they really want to know is whether they're going to outlive their money?"

We had to hand it to Kevin (but didn't, and we hope he doesn't see this article - just kidding). Maybe we do sometimes get bogged down with average rates of return, estate planning flowcharts and interest rate analysis when what people who come to see us really want is an income solution. So we narrowed down our ideas to three strategies for preventing what is a retiree's number one fear - running out of money.

1. Buy long-term care insurance

Few things can throw a retirement off course more quickly than when one spouse needs long-term care. Costs can easily rise upwards of $60,000/year - where does that leave the healthy spouse who still needs to continue life at home? Long-term care insurance can eliminate the risk of needing to spend your money too quickly on nursing care. Buy a policy with at least a $150 per day benefit, and make sure that benefit has inflation protection and can be used in a facility or in your home.

2. Keep withdrawals low

You have a 94% or better chance of not running out of money if you limit your annual withdrawals from your savings to 4%. Most clients we talk with today say they can't have the kind of comfortable retirement they've hoped for by only taking 4% withdrawals from their assets. But taking more can put you at risk, and here's a hypothetical example. A retiree, at the end of 1972, invested 60% of his portfolio in the S&P 500 (stocks) and 40% in intermediate term bonds.

• at 9% withdrawal rate, he would have run out of money by 1981.
• at 7%, his money lasted another two years, until 1983.
• at 5%, it lasted until 1993 - just over 20 years.

Now, had this illustration started in 1982 at the beginning of the Great Bull market, everything would have worked out fine. But what if you don't time your retirement so luckily?

3. Invest in a variable annuity

Annuities come with restrictions, and they come with internal fees that are higher than mutual funds alone. They also come with income guarantees that can mean a lot to the person who isn't working for money anymore. It used to be that to receive a guaranteed income from an annuity you had to give up control. In other words, you turned your life savings over to an insurance company who promised you payments for life. But you had no access to your principal (if an emergency arose) and your heirs received nothing at your death. New annuities have come on the market that offer guaranteed lifetime income (typically at 5% or better) and control over your money. They offer access to principal (which may affect your income stream) and the ability to pass your wealth to your heirs.

To learn more about these strategies, join us on Tuesday, October 17 at 7 PM at the Radisson Hotel in Monroeville for an interactive workshop called "Income for Life: Taking Longevity Risk Off the Table." This program is especially for retirees and those within five years of retirement. Admission is free but space is limited. Call (412) 258-1116 for reservations.