What is a SSRPS®?

What is a Safely Structured Retirement Planning Strategy™? 

A Safely Structured Retirement Planning Strategy™/SSRPS® can be considered a “Modern Financial Planning Discipline”, an approach used in retirement planning, and/ or estate planning, and/ or special needs planning.  In utilizing a SSRPS®, a consumer with the help of their financial professional, structures their assets (or a portion there of), using “insured/ guaranteed financial/ retirement products*”, to protect and grow assets, and/or to protect and grow income streams. When a person has a SSRPS® their a) principal is protected, b) any gains/ interest earned is locked-in/ protected from future market/ index downturns and c) they never run out of money/income in retirement.* In addition, a SSRPS® will d) eliminate inflation risk, to the degree by which the consumer receives a contractually guaranteed increasing income stream*.  In fact, the income stream generated from a SSRPS® will potentially far outpace inflation. 

A Safely Structured Retirement Planning Strategy™  is an option for growing and protecting assets, for growing and protecting retirement income, and/or growing and protecting one’s estate, and/or growing and protecting the assets and income needs for a special needs child/trust. A SSRPS® can be structured using just one product, but relative to accomplishing particular goals, two or more products may be utilized. The different/multiple products that may comprise a SSRPS®, provide the “structure” in Safely Structured Retirement Planning Strategies™ , designed to advance a client’s or a family’s overall financial security/goals.

Consider an insurance company offers insured/ guaranteed financial products that are “very different financial instruments” than those products associated with a more traditional financial planning approach, where a financial professional may be relying on the performance of securities; for example, mutual funds, or Exchange-Traded Funds, or a managed portfolio of stocks/ bonds/ and cash equivalents.  A SSRPS® uses those insurance company insured / guaranteed financial products to produce what can be considered a “safer alternative*”, as Investment Risk and Longevity Risk and Inflation risk are in essence shifted to the insurance company.  Thus when a financial professional introduces a Safely Structured Retirement Planning Strategy™ to the consumer, that consumer is offered an alternative suite of financial products, a suite of insured/guaranteed financial/ retirement products

The performance of these insured/ guaranteed financial products are not based on the performance of the insurance company’s general portfolio alone, in that the performance of these “SSRPS® products” can be said to be enhanced by product design, attributable in large part to the actuarial benefits afforded by the actuarial pooling concepts at work.  Benefiting from the “pooling of mortality risk and investment risk” allows the individual to receive “safe leverage*” that he or she couldn’t receive without the insurance company’s involvement.   

A SSRPS® can be seen as an option that is perhaps better suited for the times in which we live, a time when pensions are no longer readily available to the “average employee”, who in days gone by may have “worked for one company for 30 years”.  Today, anyone without a pension, whether they realize it or not, is tasked with assuming all of the risk associated with their financial security/ retirement aspirations.  A SSRPS® can be utilized as a “modern personal pension”, where a SSRPS® replaces the idea of an “old fashioned pension”.  In fact a SSRPS® can be seen as a “Personal Pension Plus”, in that a SSRPS® provides additional benefits that can be considered advantages, as such benefits were not offered in an old fashioned pension. With an old fashioned pension, if the employee (pensioner) died, and there was a surviving spouse, depending on the “pension choice/option” selected by the employee at the time of their retirement, a surviving spouse may or may not continue to receive that “pension check”; that “paycheck for life”. With an old fashioned pension, depending upon the employee’s selected pension choice/option, a surviving spouse may receive either a) a reduced amount, (perhaps 50% or 66% of the monthly check amount their spouse received when they were alive), or they could receive b) 0% (nothing at all/$00.00). 

A SSRPS® is available to anyone who is wondering what to do with the 401(k) they need to rollover after they change jobs or retire. A SSRPS® is available to anyone who is wondering what to do with an IRA, or to anyone who has “after-tax/non-qualified investments”, perhaps at Fidelity, or Vanguard, or Charles Schwab, Scottrade etc., available to anyone who is looking for what may be a “safer alternative for retirement planning” or just an “alternative to traditional investing”. A SSRPS® is available for retired or soon-to-be-retired persons, or to anyone who is still in their accumulation years, still working, and still saving/ investing for the future. The advisor and the consumer will have objectives, first and foremost may be protection of wealth and family, legacy/ inheritance wishes, and perhaps creating the retirement of their dreams. How a SSRPS® accomplishes some of these things or all of them depends on one’s age, assets/ account balances, estimated/ desired retirement/ semi-retirement date, and annual contributions in the accumulation period. It’s not always applicable, it depends on one’s objectives, but some aspects of SSRPS® may depend on an individual’s health as well, if planning for legacy/ inheritance.  

When you have constructed a SSRPS®, you have shifted market/ volatility risk, longevity risk, and inflation risk, from the individual to the insurance company. When a consumer utilizes only traditional financial planning products/ assets such as Stocks, bonds or other securities, he or she is assuming all risks (all by themselves).  The insurance company, in providing these “SSRPS® products”,is in a sense passing on “economies of scale and investment efficiencies”  to the individual consumer; the policy owner/ contract holders.  The argument for planning your retirement via a SSRPS® stems from the benefits of the actuarial pooling principles at work, which enable the financial professional and their clients to essentially “do more with less”, that is SSRPS® products offer the potential to receive more retirement income via the SSRPS® annuity, or a greater legacy/ inheritance via the SSRPS® Tax-Free death benefit of a life insurance policy, “more” than traditional saving and investing might produce, and without any volatility/stock market risk.  All of this can be said to be made possible via the “safe leverage” afforded by particular products that are only available from the insurance company. 

Additionally, as a variable in computing the internal rate of return with a SSRPS® is mortality/ age based, every year a person postpones setting up their Safely Structured Retirement Planning Strategy™ … they are essentially forgoing a “multiple on their money”, they lose a “multiple of their wealth”… that they would have received, had they put their SSRPS® in place a year earlier.

Steven Delaney

(*Subject to the claims paying ability of the insurance company, and contractual surrender charges.)