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Portfolio > Mutual Funds

Study: Annuities Beat Mutual Funds For Retirement Income

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Individuals who use lifetime income annuities can fund a secure retirement with lump sums that are about 25% to 40% smaller than they would need if they were using other types of investments.

David Babbel, an insurance researcher at the University of Pennsylvania business school, and Craig Merrill, a business researcher at Brigham Young University, come to that conclusion in an analysis of lifetime income annuities that was backed by New York Life Insurance Company, New York.

Stocks, bonds and mutual funds may generate higher returns in some markets, but they come with more investment risk, and they also expose retirees to the risk that the retirees will outlive their nest eggs, the researchers write.

Covering basic living expenses with income annuities can give retirees more financial flexibility and the ability to take on more investment risk, the researchers write.

A copy of the study is available


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