Variable Annuity Guarantees Disappoint Over Time (MarketWatch)

Can annuity withdrawals keep pace with inflation? After extolling the benefits of the reliable investment vehicle, Wade Pfau, a CFA charterholder and associate professor at the National Graduate Institute for Policy Studies in Japan, says “no,” warning that the limitations of an annuity may not be readily apparent to retirees. Retirees could do better using a plain old systematic withdrawal plan. But is there a place for a variable annuity with a GLWB? Sometimes, says Pfau. Obtaining GLWB protection for part of one’s retirement assets could help risk-averse retirees to sleep better at night, and could also be helpful for those who have limited access to other forms of guaranteed compensation, such as a corporate defined-benefit pension.