Securing the Golden Years: Strategies for Mitigating Retirement Risks

Over the next few years an unprecedented number of Americans will reach peak retirement age (65)—approximately 11,000 per day between 2024–2027.

By Matt Kaufman

Over the next few years an unprecedented number of Americans will reach peak retirement age (65)—approximately 11,000 per day between 2024–2027. Dubbed “Peak 65” by the Alliance for Lifetime Income, this surge of approximately 4.1 million Americans is the largest cohort of new retirees in history. Today, nearly 1 in 6 Americans are 65 or older, and this figure is expected to increase to nearly 1 in 4 by 2050, representing almost a quarter of the total U.S. population (approximately 82 million people)1. By comparison, in 1935, when the Social Security Act was passed, this ratio was about 1 in 16.

Addressing Risks Facing Retirement Savings

More than 100 million Americans face the challenge of providing for themselves when they no longer work. Adequately addressing this challenge will involve solving a trio of financial risks facing retirees: longevity, inflation and market volatility. These factors can undermine financial security, making effective retirement planning more crucial than ever.

  • Longevity: With people living longer, retirement savings must stretch further. Ensuring these funds last throughout a potentially extended retirement period requires careful planning and investment choices that offer both growth and protection.
  • Inflation: Over time, prices for goods and services tend to rise, and purchasing power tends to fall. Simply put, retirees need to outpace inflation to maintain their standard of living. As the cost of living rises, the purchasing power of fixed incomes declines. This erosion necessitates investment strategies that not only preserve but also grow assets over time.
  • Volatility: The unpredictable nature of financial markets can cause significant portfolio losses, posing a threat to retirement security. Younger investors and those accumulating wealth often have time to wait out these storms. For those near or in retirement, increased portfolio volatility and large down markets can be devastating to retirement savings

Overcoming Retirement Threats with Structured Protection ETFs

Historically, creating retirement security was thought to be a task left solely to life insurance companies, often through the use of annuities. Today, advancements in the exchange traded fund (ETF) marketplace and product innovation have sparked the development of an additional set of retirement tools capable of solving challenges specific to retirees.

Calamos Structured Protection ETFs are a series of ETFs designed to deliver 100% downside protection and defined upside participation (to a cap) relative to a major market index, like the S&P 500® or Nasdaq 100® Index, over a 1-year outcome period. These revolutionary ETFs retain many of the desired “annuity-like” attributes, such as principal protected growth (over an outcome period), but delivered in a more liquid, cost-effective, transparent and tax-efficient way.

  • Downside Protectionfor Portfolio Longevity and Reduced Volatility: Structured Protection ETFs offer 100% downside protection over an outcome period, helping to preserve wealth during market downturns. Those investors buying Structured Protection ETFs during the outcome period may still obtain a significant level of protection, which can be known prior to investing.
  • Growth Potential—for Inflation Protection: In addition to downside protection, Structured Protection ETFs allow for participation in market gains up to a cap, balancing risk and reward for retirees, and offering enough growth potential to help outpace inflation over time.
  • Liquidity and Flexibilityfor the Unknowns: Unlike most annuities, Structured Protection ETFs offer greater liquidity, allowing investors to access their funds more easily and adjust their strategies as needed.

By incorporating Structured Protection ETFs into a retirement portfolio, investors may be able to achieve a balanced approach that ensures longevity of funds, safeguards against inflation, and mitigates the impact of market volatility.

These attributes make Structured Protection ETFs a valuable tool in modern retirement planning.

Matt Kaufman is Head of ETFs with Calamos Investments

Fichtner, J. (2024, January). The Peak 65 Zone is Here – Creating a New Framework for America’s Retirement Security.

The information in each fund’s prospectus and statement of additional information) is not complete and may be changed. We may not sell the securities of any fund until such fund’s registration statement filed with the Securities and Exchange Commission is effective. Each fund’s prospectus and statement of additional information is not an offer to sell such fund’s securities and is not soliciting an offer to buy such fund’s securities in any state where the offer or sale is not permitted.Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.

Calamos Investments LLC, referred to herein Calamos is a financial services company offering such services through its subsidiaries: Calamos Advisors LLC, Calamos Wealth Management LLC, Calamos Investments LLP, and Calamos Financial Services LLC.

An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund’s prospectus.

Investing involves risks. Loss of principal is possible. The Fund(s) face numerous market trading risks, including authorized participation concentration risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, clearing member default risk, correlation risk, derivatives risk, equity securities risk, investment timing risk, large-capitalization investing risk, liquidity risk, market maker risk, market risk, non-diversification risk, options risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, underlying ETF risk and valuation risk. For a detailed list of fund risks see the prospectus.

There are no assurances the Fund(s) will be successful in providing the sought-after protection. The outcomes that the Fund(s) seeks to provide may only be realized if you are holding shares on the first day of the outcome period and continue to hold them on the last day of the outcome period, approximately one year. There is no guarantee that the outcomes for an outcome period will be realized or that the Fund(s) will achieve its investment objective. If the outcome period has begun and the underlying ETF has increased in value, any appreciation of the Fund(s) by virtue of increases in the underlying ETF since the commencement of the outcome period will not be protected by the sought-after protection, and an investor could experience losses until the underlying ETF returns to the original price at the commencement of the outcome period. Fund shareholders are subject to an upside return cap (the “Cap”) that represents the maximum percentage return an investor can achieve from an investment in the fund(s) for the outcome period, before fees and expenses. If the outcome period has begun and the Fund(s) have increased in value to a level near to the Cap, an investor purchasing at that price has little or no ability to achieve gains but remains vulnerable to downside risks. Additionally, the Cap may rise or fall from one outcome period to the next. The Cap, and the Fund(s) position relative to it, should be considered before investing in the Fund(s). The Fund(s) website, www.calamos.com, provides important Fund information as well information relating to the potential outcomes of an investment in the Fund(s) on a daily basis.

The Fund(s) are designed to provide point-to-point exposure to the price return of the reference asset via a basket of Flex Options. As a result, the ETFs are not expected to move directly in line with the reference asset during the interim period. Investors purchasing shares after an outcome period has begun may experience very different results than fund’s investment objective. Initial outcome periods are approximately 1-year beginning on the fund’s inception date. Following the initial outcome period, each subsequent outcome period will begin on the first day of the month the fund was incepted. After the conclusion of an outcome period, another will begin.

FLEX Options Risk– The Fund(s) will utilize FLEX Options issued and guaranteed for settlement by the Options Clearing Corporation (OCC). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Fund(s) could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Fund(s) may have difficulty closing out certain FLEX Options positions at desired times and prices. The values of FLEX Options do not increase or decrease at the same rate as the reference asset and may vary due to factors other than the price of reference asset. Shares are bought and sold at market price, not net asset value (NAV), and are not individually redeemable from the fund. NAV represents the value of each share’s portion of the fund’s underlying assets and cash at the end of the trading day. Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where fund shares are listed.

100% capital protection is over a one-year period before fees and expenses. All caps are pre-determined.

Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period. Cap range depicted is the high and low cap rate over the past 15 trading days. Actual cap delivered by the Fund may be different.

Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining.

Outcome Period – Number of days in the Outcome Period.

Calamos Financial Services LLC, Distributor

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