Why don’t more retirees convert at least some of their nest egg to lifetime income? It’s a question that vexes financial planners and has policymakers scrambling for solutions.
For many years, traditional defined-benefit pensions provided millions of people with an income stream they could not outlive. Along with Social Security benefits, this pension income covered all the basics and possibly then some, for as long as you lived. Personal savings was gravy.
Such pensions largely have been replaced with defined-contribution plans like the 401(k), which may provide a sizable kitty at retirement. But now it’s up to the retiree to decide how to make that money last for 20 or 30 years. Most people aren’t very good at it, and their eroded Social Security benefits don’t offer much of a backstop.
Read the full article at Time.