Security Benefit

Security Benefit is a Kansas-based financial services company that provides investment and retirement solutions through independent financial representatives. 

Security Benefit has approximately $30 billion in assets under management and distributes its products through a network of 27,000 financial advisors.

Security Benefit Life Insurance Company is the provider of Security Benefit's annuity offerings.  Annuity products offered by Security Benefit include both fixed annuities and variable annuities.

Security Benefit was acquired in 2010 by a group of private equity investors led by Guggenheim Partners.

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TypeInsurance Company
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AddressOne Security Benefit Place
Topeka, KS 66636-0001

Information & Articles about Security Benefit

Laurence Kotlikoff is a Professor of Economics and Boston University. Professor Kotlikoff is one of the nation’s leading experts on fiscal policy, national saving and personal finance. 

Professor Kotlikoff is the author or co-author of 15 books and he publishes extensively in newspapers, magazines and blogs on issues of personal finance, financial reform, taxes, Social Security, healthcare, deficits, generational accounting, pensions and insurance.

Kotlikoff’s most recent book is The Clash of Generations: Saving Ourselves, Our Kids and Our Economy. We had an opportunity to speak to Professor Kotlikoff about the book and related issues.

Annuity Digest: A recent Credit Suisse report suggests that health spending has essentially been the sole driver of the growth in consumer spending over the past 50 years.  Since consumer spending is a key driver of economic growth in the United States, could the growth in health spending be seen as a positive for the economy?  Could increases in health care entitlement spending be seen as a form of fiscal stimulus and a critical source of growth in a debt-flooded world that is greatly in need of a growth engine?

Professor Kotlikoff: Publicly funded health spending is a transfer payment, so it could be seen as a form of stimulus like a tax cut.

If you think that these policies are really working and we need more of them, then you may advocate stimulus through health spending.

I don’t think they are working.  We are spending money neither we nor our children have and digging ourselves a deeper hole.

The real issue with the economy is what is referred to as a coordination failure.

A coordination failure involves employers who are not hiring because other employers are not hiring.  At the height of the Great Depression President Roosevelt said,“There is nothing to fear but fear itself.”  He was right.  But he should have added that economic fear is contagious, can be very long-lasting, and can be overcome only by coordinating simultaneous hiring by employers.

Were I President, I’d cajole, persuade, urge, beg -- you name it -- medium and large employers to each voluntarily hire 5 percent more workers. Were they to do so, then, voila!, they’d all have new customers, namely the workers that the other employers hired.  

The alternative is spending more money that we don’t have which will ultimately lead to even greater clash of generations than we are now producing by leaving massive fiscal bills to our children.  

Annuity Digest: Could the “glass half full” perspective also be applied to the longevity issue?  There are, of course, liabilities associated with longevity, but isn’t the collective human capital of the elderly also a huge asset that can contribute to economic growth?   

Professor Kotlikoff: I agree. We should not be forcing the elderly out of the workforce.  

I see this happening all the time in my own field.  Very productive economists are viewed as not worth hiring because they are older.

The reality is there are a lot of really good people who might work on a fixed contract for 10 years rather than on tenured-contract basis.

I think age discrimination is widespread and needs to be eliminated.

The elderly need to be treated fairly. But so do the young.  Today’s young are the victims of a six-decade long Ponzi scheme that has produced a massive -- $200 trillion -- fiscal gap in the government’s finances, where the gap is the difference between all future spending, including servicing the official debt, and all future taxes -- all measured in present value.

Annuity Digest: Why have bond markets failed to acknowledge the United States’ off-the-books liabilities and fiscal gap, and what factors are likely to contribute to a change in sentiment?

Professor Kotlikoff: I guess not enough people have read my books!

The real story is that bond traders are looking at what one another are doing.  If they lose on their own they look bad (Bill Gross selling Treasuries is a recent example), but if they lose as part of the herd they’re safe.  

This behavior is one of the reasons we have distorted pricing in our capital markets.

Financial markets mis-price securities all the time.  The bond bubble of the nineteen seventies, the dot com bubble of the late nineties, and the housing bubble of aughts are just three examples of traders missing the boat.  

My advice would be to get out of any medium and long-term nominal bonds right away because these securities are likely selling at their peak.

But I may be wrong.  People are so focused on Europe right now. That issue could linger while the U.S. will likely continue to spend far too much and tax far too little and hope nobody notices.

Maybe the market will wake up when debt-to-GDP hits 100 percent within the next 5 years.  

Trying to get by through borrowing on the cheap will go on as long as it goes on.

Maybe we think we can just print dollar ad infinitum and cover all our bills that way.  But the dollar’s role as the world’s premier reserve currency could change overnight.  At some point the Yuan may replace the dollar just like the dollar replaced the pound.  Indeed, the Chinese are now signing oil deals with Russia and other countries where the payment is in yuan.  This, interestingly enough, was the hypothetical scenario I drew in the prologue toThe Clash of Generations.  

Bottom line -- at some point people will put 2+2 together and realize that the United States is broke.

Annuity Digest: Japan was one of the first countries to have dropped-off the demographic cliff so to speak.  What lessons can the U.S. draw from Japan’s experience over the past several decades?  

Professor Kotlikoff: A key lesson is that they had a banking system that failed and has not been reformed.

The U.S. also has a banking system that failed and has not been reformed. I’ve been advocating Limited Purpose Banking, which involves 100 percent equity-financed mutual fund banking and a government agency to verify and disclose financial securities.  This would eliminate the two key problems with the banking system -- opacity and leverage.

The Japanese would have been better off over the past couple of decades with a limited purpose banking system.

People are pessimistic and continue to be so in Japan because expectations have not changed.  This is probably another example of coordination failure, although it is hard to prove.

We do know there is a very high correlation between business confidence and the state of the economy.

Again, coordination based on fear is very damaging to an economy.

Coordinated hiring of unemployed and underemployed workers is what needs to take place--and quickly.

Annuity Digest: The sections in the book on the natural glide path of retirement spending and the profound impact of personal decisions (versus investing) on retirement spending were fantastic.  It seems unlikely, however, that this information will be heavily promoted by the financial services industry. How can this important message become more widespread?

Professor Kotlikoff: First, thanks very much for the generous compliment.  Unfortunately, Wall Street is not necessarily our friend. But there are many, many things we can do independently of Wall Street to safely and significantly raise our standards of living.

I hope people who need independent and good personal financial advice read the book as well as another of our books, entitled Spend ‘Til the End.

In addition, I have developed financial planning software through my company, Economic Security Planning, Inc., that helps people find safe ways to raise their living standards.  

We have three websites where we market download and online programs to financial planners and households:

At we have a simple version of our lifetime financial planning program -- ESPlannerBASIC, which can be used for free.  You just go to the site, don’t log in, and click Begin Planning. There’s a fun animated video to watch that explains our software.

Money Magazine ranked ESPlannerBASIC the #1 financial tool on the web.  And if you go to and click on Press, you’ll see over 100 articles from the NY Times, the Wall Street Journal, the Washington Post, BusinessWeek -- you name it -- discussing our software. 

I’m particularly proud of two recent products we’ve introduced.  One is called Upside Investing.  When you run our lifetime planner with Upside Investing turned on it builds a floor to your living standard assuming everything you have and put in the stock market is completely lost. But it also shows you the probability of having higher living standards in the future once you begin converting your stock balances to safe assets.

In effect, Upside Investing treats holding risky stocks like gambling in the casino.  When we frequent the casino, we leave our wallets at home and gamble a fixed amount of money.   In so doing we’re putting a floor to our living standard.  And we don’t spend our winnings until we leave the casino.  

The other new product is called Maximize My Social Security.  Deciding when to take Social Security benefits in unbelievably complicated.  If you make the wrong move, you can easily leave huge amounts of money on the table.   Maximize My Social Security takes the guesswork out of the decision.

Annuity Digest: Thanks very much Professor Kotlikoff.

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The first Social Security cost of living adjustment (COLA) since 2009 will go into effect in January 2012.

Social Security beneficiaries will receive a 3.6 percent cost of living adjustment beginning in January.  This 3.6 percent increase is equivalent to an average of $43 per month for each program participant.

This is welcome news to 55 million program beneficiaries—many of whom are largely reliant on Social Security.

After the increase, the average monthly Social Security benefit will be $1,229.

The increase will cost the government roughly $28 billion.

Source: Bloomberg

Full Story

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Roughly 10,000 Americans will retire each day for the next nineteen years.  Many millions of these retirees will have financial profiles that are considered statistically average.  

What, exactly, does it mean to be financially average, and what might retirement look like for the average person or household?  How might the financial aspects of retirement play-out for you, your parents, or your family and friends?  

Let’s take a look at some data sources to consider the average profile and how it may apply to your situation.  For simplicity, I’ll give the average American retiree a name – I’ll call him William.

Who is William?

Let’s lend some definition to William by building a financial profile:

  • First, it might make sense to refer to William as median rather than average since we will use median statistics that are not skewed by wealth concentrations.
  • I’ll assume that William falls in the 55 – 64 age range and is presumably near or at retirement age.
  • In 2009, the median household income for the 55 – 64 age range was $56,973.
  • Median net worth statistics come from a recent Federal Reserve report titled “Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 – 2009."  This report noted that in 2009 the median net worth (including the value of a primary residence) for households in the 55 – 64 age range was $244,000.   
  • The average Social Security benefit for a retired couple in 2011 is $22,884.
  • Let’s assume that there is no pension income from an employer-sponsored defined benefit pension plan (defined benefit pensions are different from 401k plans) since these types of plans have become all but extinct in the private sector over the past thirty years.
  • The expected present value of lifetime uninsured healthcare costs (including insurance premiums, out of pocket costs, and home health costs) for a typical couple age 65 is $197,000.
  • Include the cost of nursing home care to the figure above and the expected value of lifetime uninsured health costs is $260,000 (with a five percent chance of exceeding $570,000…).
  • Let’s assume that William is 60 years old and in good health.  William’s life expectancy at this point is 17.9 years.
  • Let’s further assume that William is married, and that his spouse is also age 60 and in good health.  The probability that William lives to age 90 is 9.2 percent, while the probability that his wife lives to age 90 is 20.1 percent.  The probability that at least one person in the couple lives to age 90 is 27.5 percent.
  • Last, let’s assume that William and his wife plan to retire at age 65.

What are William’s Retirement Income Needs?

So, William needs to think about financing some portion of his pre-retirement income ($56,973) and future health spending over a very long time horizon – at least 20 years.  At a minimum, William should think about a 17.9 year planning horizon, which leaves roughly 13 retirement years if he retires at 65.  A more prudent planning horizon would be 20 - 25 years since there is almost a 1 in 3 chance that either he or his wife will survive to age 90.

The resources available for this long-term financing of William’s retirement include $244,000 in private wealth (a good portion of which is in the form of relatively illiquid home equity) and $22,884 in inflation-adjusted regular payments from Social Security.

The following is an approximate assessment of William’s retirement income needs:

  • Let’s go with the conventional assumption that retirement spending should be based on 85 percent of pre-retirement income.  Based on this assumption, William needs to generate $48,427 per year in after tax income.  Let’s not forget that this $48,427 will need to increase each year to keep pace with inflation. 
  • William receives $22,884 per year in inflation-adjusted income from Social Security.  This leaves a net after tax income requirement of $25,543.
  • For the purpose of simplicity, we will leave-out any consideration of taxes on William’s Social Security payments.  However, William may have to pay some taxes on his Social Security income.
  • Determining the impact of health costs on retirement spending is a bit tricky since there are a number of ways to finance healthcare expenses.  For the purpose of determining the impact on annual retirement spending, let’s use the annual payment that is required to finance the expected present value of $197,000.  Using this approach, the expected out-of-pocket health care expense assuming no nursing home costs over a 20 year time horizon is $14,495 per year.  
  • Adding the above health expense to our previous net after tax income requirement (that was net of Social Security payments) leaves William with a total after tax retirement income need of $40,038 per year.  

Can William Make it?

The bottom-line is that William needs to figure-out how his $244,000 nest egg can finance $40,038 per year for 20 years. 

Before discussing how this might occur, however, let’s first take a look at whether it is at all likely that William can retire based on his current needs and resources.

Stay tuned—the next article in this series will explore this issue in detail.

Are you interested in receiving a personalized report that shows the likelihood that your nest egg will last throughout your retirement? 

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