More Retirement Plans Offering Pensions Amid Post-Retirement Security Crisis

Financial Advisors

  • Money Manager is rolling out options to help workers reach retirement with a steady source of income for life.
  • This is where pensions come into play, where monthly income is guaranteed like social security and pensions.

Some of America’s wealth management giants are grappling with growing concerns that more Americans will live longer than they save for retirement.

Starting in the fall, Fidelity will allow plan participants to convert a portion of their retirement savings into an immediate income pension to provide pension-like payments throughout retirement.

Fidelity Investments is the largest US 401(k) plan provider. In total, this financial services firm handles over 35 million retirement accounts.

BlackRock and State Street Global Advisors, the two largest asset managers, have also announced target-date funds with retirement income options.

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“As Americans live longer and healthier lives, the risk of depleting their savings has become a threat to retirement financial insecurity,” said Mark McComb, chief client officer at BlackRock, in a statement. Accelerating the “quiet crisis”.

According to the Institute for Employee Benefits, most workers want a guaranteed monthly income after retirement so they don’t exceed their savings.

The passage of the Secure Act also made it easier for employers to offer an annuity as one of the retirement savings plan options.

It’s nice to have a pension option when you retire.

carolyn mcclanahan

Founder of Life Planning Partners

Insurance companies, asset managers, and employers are now moving to make these guaranteed lifetime income options more widely available through 401(k)s and other defined contribution plans.

Carolyn McClanahan, certified financial planner and founder of Life Planning Partners, based in Jacksonville, Fla.

But with any annuity, make sure you’re comparing offerings and fees, added McClanahan, who is also a member of CNBC’s Advisory Council.

Annuities have also benefited from rising interest rates, which typically translates into better returns on investment for insurers.

“Certainly, pension payments are very attractive right now,” said Keri Dorgan, senior vice president of Retirement Solutions at Fidelity.

Dorgan said interest in pensions will continue to grow.

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