1. Facing Retirement Risks
Chip Castille, Managing Director
Head of US & Canada Defined Contribution
15 November 2011
FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION

2. Post retirement risk
Inflation risk
Longevity risk
Income replacement

3. Lifetime income is typically thought of in terms of security
Post retirement risk
Lifetime income is typically thought of in terms of security
But it can also be considered in terms of income replacement

4. Post retirement risk
A better way to improve income replacement Provide stability at retirement
Annuities

5. Post retirement risk Two options to create retirement income
Bond ladder
Annuity

6. Post retirement risk
An annuity provides for a more efficient way to spend in retirement
Source: BlackRock. Assumptions: 4.0% Discount Rate; 2.5% Inflation Rate; 30 year planning horizon
Source: BlackRock. Assumptions: 4.0% Discount Rate; 2.5% Inflation Rate; 30 year planning horizon

7. Post retirement risk
When it comes to sustaining the spending phase – employees indicate a strong preference for retirement income vs. receipt of a retirement lump sum . . .
94% favor an income solution in their DC plan (a 2% increase from 2010)
Q: Which of the following would you prefer to receive at retirement?

8. Retirement Income
Incorporating income via an annuity into target date funds
Income accumulation becomes the “new” QDIA default
Transparent & easy to use
Ability show monthly income “paycheck” at retirement
Participant can receive a guaranteed lifetime income stream while enjoying the liquidity and growth benefits of a market portfolio
Customized income benefit at commencement

9. Retirement Income
Retirement Income products will help many participants shift their focus away from a lump sum towards a monthly income replacement
For some participants, it will be easier to estimate their monthly income needs versus how much of a lump sum is required
Or would you prefer 3 cups of coffee/day throughout retirement?
Example:
Would 1000 gallons of coffee last you through retirement?
This may work for some
This will work for others

10. Disclosure
The opinions expressed are as of June 13, 2011 and may change as subsequent conditions vary.  The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock and/or its subsidiaries (together, "BlackRock") to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is no guarantee of future results. The strategies referred to herein are among various investment strategies that are managed by BlackRock, Inc. and its subsidiaries (together, "BlackRock") as part of its investment management and fiduciary services. Strategies may include collective investment funds maintained by BlackRock Institutional Trust Company, N.A., which are available only to certain qualified employee benefit plans and governmental plans and not offered to the general public. Accordingly, prospectuses are not required and prices are not available in local publications. To obtain pricing information, please contact a defined contribution strategist. Strategies maintained by BlackRock are not insured by the Federal Deposit Insurance Corporation and are not guaranteed by BlackRock or its affiliates. This information is for illustrative purposes only and is not intended to provide investment advice.  BlackRock dose not guarantee the suitability or potential value of any particular investment.  Investing involves risk, including possible loss of principal.  ©2011 BlackRock, Inc., All Rights Reserved.  CTF-0255

11. Survey Methodology
BlackRock’s third annual defined contribution survey was conducted online by Boston Research Group during March, Two separate nationwide surveys focused on American workers participating in defined contribution plans and American corporations sponsoring these plans. The 1,000 employees polled participate in a variety of DC plans, including 401(k) plans, 403(b) plans, profit sharing and stock purchase plans. Participants were drawn randomly across all sized plans and from all sized employers with a maximum sampling error of +/– 2 percentage points at a 95% confidence level. The plan sponsor sample of 119 corporate executives was intentionally designed to represent extremely large plans to capture the opinions of thought-leaders among the plan sponsor universe. All have responsibility for their employer’s DC plan, and represent plans with $525 billion in plan assets and 4.1 million plan participants. 60% of the plans represented have more than $1 billion in participant assets.
This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Any opinions expressed are as of May 2011 and may change as subsequent conditions vary. The information and opinions contained in this paper are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This paper may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation.
BlackRock is a registered trademark of BlackRock, Inc.
© 2011 BlackRock, Inc. All rights reserved.