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November 16, 2008 at 02:00 PM
Because of the extended life expectancy many baby boomers expect to have, about one-fifth of boomers surveyed by Lincoln Retirement Institute speculated they would fall short or just meet their basic living expenses with their current resources.
They have other concerns too: the long-term viability of the Social Security system, the dwindling number of defined benefit plans and rising health care costs.
Taken together, these forces are spurring boomers to look for retirement savings solutions that will provide opportunities for long-term growth through quality investment options at time of distribution.
Opting to invest distributions from a retirement plan in a variable annuity with a guaranteed lifetime income benefit is one way to ensure retirement income lasts.
For years, employers and employees have grown accustomed to having defined parameters around the distribution of retirement income from pension plans.
More recently, however, economic and regulatory changes, such as the Pension Protection Act of 2006, will make defined contribution plans the primary vehicle for retirement income for most employees.
The growth of these plans has created an impetus for the evolution of retirement plan distribution options that will offer growth and protection of assets well into retirement.
Annuitization of DC plans allows retirees to make assets from 401(k) and 403(b) plans or other retirement programs work for them at the end of their careers.
More time in retirement means assets have to work harder to offset the effects of inflation and market volatility, both of which can diminish purchasing power and significantly erode value of savings. Even modest inflation can have a profound effect on purchasing power; and a market downturn, particularly in the early years of taking income, can quickly deplete savings.
