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SRI 111 — Retirement Marketplace

Course Type: Highly Interactive Online Course, Designation
Topics: Retirement & Annuities
Designations: ASRI, FSRI, FSRI Level I
Language: English


This online interactive course provides an overview of the needs of people preparing for retirement, the key providers and products that offer solutions to those needs, and the critical concepts that affect retirement planning.

After completing this course, learners should be able to:

  • Identify the companies operating in the retirement marketplace and the types of retirement services and solutions they provide
  • Describe the personal and financial risks people face before and during retirement
  • Explain the relationships between risks and returns
  • Explain the techniques individuals can use to manage risks
  • Identify important concepts related to retirement income and savings, such as the time value of money and portfolio management


  • Overview of the Retirement Savings and Income Environment
  • Retirement Income Needs and Resources
  • Retirement Financial Services Organizations, Products, and Services
  • Personal and Financial Risks Associated with Retirement
  • Risk and Return; Risk Management for Individuals
  • Time Value of Money; Portfolio Management Concepts

Module I: The Retirement Savings and Income Environment

Lesson 1: The Pre-Retirement Market

I. Available Resources

Young Adults (25-45 years from retirement)

Resources primarily wages from employment

Three income-based groups: low-income, middle-income, high-income

Main focus: starting to save for retirement

Midlife (10-25 years from retirement)

Resources include property, investments, funds in personal savings and employer-sponsored retirement plans, and other household assets – in addition to wages

Main focus: reviewing retirement savings to make sure they’re “on track”

Pre-retirees (5-10 years from retirement)

May have accumulated considerable assets in retirement savings plans and in personal savings and investment accounts

Divided into groups based on affluence or net worth: mass affluent, high-net-worth, ultra-high-net-worth

Main focus: beginning preliminary planning process and transitioning into retirement

II. Expenses

Living expenses: food, clothing, entertainment, travel, etc.

Health care expenses: cost of health care coverage and out-of-pocket medical expenses

Trend toward HSAs instead of traditional medical expense insurance or managed care plans

Child care/education expenses

Two-income households create need for/expense of outside child care

Costs of higher education increasing, availability of scholarships/subsidies decreasing

Need to save for education in advance

Debt: mortgage payments, car payments, credit card payments, repayment of personal education loans

Problem: saving for future retirement needs often becomes secondary to satisfying immediate financial needs

III. Retirement Savings

A. Employer-sponsored retirement savings plans (brief description of kinds of plans, tax advantages)

B. Personal savings/investments (brief description of IRAs, savings products/plans, and investment products/accounts)

Lesson 2: The Retirement Market

I. Retirement Resources: Come from three primary sources

A. Government-sponsored retirement plans: Social Security

Benefits funded by taxes on earned income; employers/employees split contributions

Eligibility determined by work history

Benefit amounts depend on age, number of years of employment, whether individual receives individual and/or spousal benefits

Early retirement reduces benefit amounts; delaying retirement can increase benefit by up to 32%

B. Employer-sponsored retirement savings plans

Pension plans

Profit sharing plans

Retirement savings plans

Plans can be structured as defined benefit or defined contribution plans

C. Personal savings and investments

Tax advantages for establishing individual retirement arrangements (IRAs). Can be funded by variety of financial products

Retirement savings contribution credit, saver’s credit, for making voluntary contributions to personal savings plans.

D. Investments and other assets. Many retirees, especially in upper income brackets, have established personal investment portfolios

II. Retirement Expenses

A. Overall, expenses decrease with age. Especially true for

Living expenses: spending on food, clothing, travel, etc. typically decrease as family size decreases. Travel and entertainment costs often decrease as people age. Actual accosts of products and services may increase as result of inflation

Childcare/education expenses generally decrease/end as children become independent

Debt: Amount often decreases as mortgages/car loans are paid off and general spending decreases

B. Healthcare expenses increase with age

Increasing illness/injury

Greater likelihood of chronic illness

Possibility of physical/mental disability – may require long-term professional care at home or in a long-term care facility

Medicare/Medicaid or personal insurance

Programs cover only part of expenses

Require premiums, deductibles, coinsurance/copayments

III. Concerns About Retirement

A. Doubts about retirement programs: Most pre-retirees and retirees question ability of traditional programs to provide a reliable source of income during retirement

Social Security

Using current contribution to fund current benefits

More money being paid out than being contributed

Employer-sponsored retirement plans

Shift from DB to DC plans means people don’t know in advance how much income they will have

Payments usually not guaranteed for life

DC plans introduce risk—actual amount available depends on market performance

Personal Savings: rates are low in spite of government efforts to encourage savings

B. Effect of changes in family structure

Death of spouse or divorce can result in immediate changes in lifestyle and, in some cases, significant economic decline

Decreases in household size—children marry and relocate—can reduce availability of home care and increase need for outside assistance

Increase in household size—need to assimilate children/grandchildren/parents into household—can increase expenses and affect how available resources are allocated

Nearly 70% of Americans will experience one or more of these changes

C. Longevity

People are growing older

People are living longer

Mismatches between available retirement resources and actual retirement needs

Lesson 3: The Retirement Industry

The retirement marketplace includes a wide variety of key players and an even wider variety of key retirement products designed to meet retirement needs.

I. Key Participants

A. Contractual Savings Institutions

Purpose and operation

Primary types: Insurance companies and Pension funds

B. Depository Institutions

Purpose and operation

Primary types: commercial banks, savings & loan associations, mutual savings banks, credit unions

C. Investment Institutions

Purpose and function

Primary types: broker-dealers, mutual fund complexes

II. Financial Products

A. Product classification

Definition of goods and services

Customers, branding, packaging

B. Unique characteristics of financial products



III. Key Retirement Products.

A. Cash management products allow customers to manage available funds

B. Asset accumulation products allow customers to increase the amount and/or value of their assets over time.

C. Asset protection products protect owners against the risk of financial loss.

D. Asset distributions products provide ways to make resources available when needed.

IV. The Institutional Market.

A. Primary market segments

Plan providers: companies that design, develop, and market retirement products and plans to businesses and organizations. Plan providers include insurance companies, banks, mutual fund companies, and broker-dealers.

Plan sponsors: companies and organizations that purchase retirement products and plans for the benefit of employees or members.

Public sector sponsors include federal, state, and local government agencies such as school systems, police and fire departments, and the military.

Private sector sponsors include for-profit businesses not owned or operated by federal state, or local governments.

Service and Support providers: people and companies that provide support services to plan sponsors and/or plan providers

Asset managers professionally manage plan assets for large plans

Consultants/Advisors/Brokers work with plan sponsors and plan fiduciaries to help them review and select plan investments

Plan administrators perform regulatory and compliance functions for qualified plans

Record keepers handle contributions and payouts – money in and money out

Module II: Retirement Concepts

Lesson 1: Personal Risks

I. Resource Risks

A. Unemployment

Results in a loss of present income.

Affect retirement income by eliminating contributions to Social Security, employer-sponsored retirement plans, and savings

B. Sequence of returns risk: Low return rates during retirement plan draw down period

C. Public policy decisions.

Current/proposed changes to Social Security and Medicare programs

Tax issues

D. Foreign exposure/currency risks: foreign securities/assets could lose value if value of dollar decreases

E. Fund management risk: fund managers may deviate from stated objectives and/or select bad stocks/bonds

II. Expense Risks

A. Loss of health care coverage

Personal insurance increase the cost of coverage

Access to government programs and amounts of coverage may be limited

B. Loss of purchasing power

Inflation increases cost of living

With the exception of Social Security, defined benefit plans typically don’t adjust for increases in the cost of living

Defined contribution plans don’t guarantee consistent account growth

III. Longevity Risks.

A. Longer lifetimes create a need for more income over a longer period of time.

Most retirement products don’t offer mechanisms for turning accumulated amounts into lifetime income stream

Plans that provide lifetime benefits based on mortality rates. Fifty percent of retirees likely to live longer than expected.

Other retirement products typically don’t offer lifetime benefits or mechanisms for turning accumulated amounts into a lifetime income stream.

IV. Techniques for Managing Personal Risks.

A. Basic strategies to manage personal risks: avoiding risk, controlling risk, retaining risk, or transferring risk

Lesson 2: Investment Risks and Returns

I. Investment Risks

A. Types of Investment Risk: interest rate risk, reinvestment rate risk, liquidity risk, equity risk, maturity risk, call risk, and default risk.

B. Measuring Risk. Use of standard deviation to describe risk levels

C. Techniques for Managing Risks.

General techniques: avoidance, control, acceptance, and transfer

Diversification: to manage diversifiable risks

II. Returns.

A. Types of Returns



Capital appreciation

B. Types of Interest

Definition/description of simple interest/ compound interest, and nominal rate/ effective rate

Effects of Compounding: length of the compounding period, number of payments made, number of times interest is compounded

C. The Rule of 72. Definition, calculation methods.

D. The Risk-Return Tradeoff


Impact on investment decisions

Factors affective risk: risk tolerance, required rate of return, risk-free rate of return, and risk premium.

Lesson 3: The Time Value of Money

I. Future Value

A. Calculations

B. Using future value interest factors (FVIF)

C. Patterns in FVIFs related to interest rates and time

II. Present Value.

A. Calculations

B. Using present value interest factors (PVIFs)

C. Patterns in PVIFs related to interest rates and time

III. The Impact of the Time Value of Money.

A. Importance of saving early

B. Impact of timing of interest payments: ordinary annuities and annuities due

C. General Rules for Understanding the Time Value of Money

Lesson 4: Portfolio Management

I. Creating an investment portfolio

A. Setting goals and strategies

B. Selecting assets and deciding asset allocations

C. Taking steps to ensure diversification.

II. Portfolio review

A. Periodically measuring and analyzing portfolio and investment performance

B. Comparing current performance to performance goals

III. Portfolio Management

A. Dollar-cost averaging: definition and purpose

B. Rebalancing: definition and purpose

Course Format

LOMA’s popular online interactive courses teach important industry concepts through an engaging, highly interactive, multi-media approach that often includes integrated video, audio and scenario-based learning. Online interactive courses are designation courses with integrated exams—the modularized examinations are built right into the course as part of the learning experience. No separate exam enrollment required!

Exam Format

Integrated Exams

Online interactive courses are non-proctored designation courses—the modularized examinations are built right into the course as part of the learning experience. No separate exam enrollment required!

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