Creating real retirement security with the Personal Pension. Making annuities an asset class. Tweets: #aging, #longevity, #retirement, #fintech, #insurtech
Hi Product Hunt! Wanted to introduce you all to the Personal Pension, something we’ve been working on for a while. We think retirement right now is too darn complicated and too DIY — and that’s not the way it used to be.
A few years ago, I was seeing both personally and professionally how not having pensions is making retirement more complicated/less likely for GenX and millennials.
How It works: You contribute in small amounts over time, and then when you retire, you get a monthly paycheck that keeps coming as long as you’re alive. So simple a monkey could do it!
The Personal Pension is a paycheck that comes every month in retirement and lasts as long as you’re alive. It’s backed by several highly-rated insurers with returns similar to bonds. But unlike a bond, there’s no market risk. It also ensures you don’t outlive your money (since it lasts as long as you’re alive).
Said differently, we’re reinventing the annuity market so it’s (1) digital (2) simpler (3) easier to get started and (4) better for consumers. Think Fabric, Quilt, or Ladder — but instead of someone you love getting paid if you die, this pays you retirement income as long as you’re alive.
Annuities have a dodgy reputation (rightfully in many cases!), so we’re especially excited about the opportunity to create a real asset class — transparent, low-fee, low-minimum, and easy to diversify.
We’d love your feedback! Getting people to think about their retirement in terms of income, rather than assets is a big behavioral shift, so any and all ideas would be much appreciated!
I'm always in favor of making retirement simpler! Based on general inputs (30 y.o. male, $10K contribution/year), the annual payout at 70 y.o. is $61K/year. Using a simple model (same age/ retirement year, 6% rate of return) before retirement, it appears Blueprint can earn and payout ~4% of the principal annually once the member retires. Is this simple methodology correct?
The benefit is guaranteed income, however, it doesn't come cheap (giving up ~$1.5M in principal to pass on).
@campbellcapital No doubt! And your figures are (at least directionally) correct. You're definitely foregoing some market upside for the certainty of getting a monthly paycheck in retirement for as long as you live.
We think the best way to think about it is as a replacement for some or all of your retirement portfolio’s fixed income/bond portfolio. In a world where you know you won't be spending down principal in retirement, it probably doesn't make sense. But for the vast majority of us, having enough ourselves is the primary concern. In terms of money to pass on, the quotes you probably saw include a refund of any unpaid principal if you die earlier than expected.
Retirement has three major risks -- inflation risk, market risk and longevity risk -- and an all market portfolio doesn't protect against 2 of those 3. A pension did.
So, not an elixir or a reason to not be in the market, but we think it’s an important piece of most retirement portfolios in a world where very few of us are getting a pension.
@careymatthewr Thanks for the detailed explanation! Completely understand the need to replace a pension with a simple and stable option. Not an easy task seeing as most public pensions are grossly underfunded. Best of luck!
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Blueprint Income