Have you heard of the Retirement and Enhancement and Savings Act?
The bill would make it easier for workers to guarantee their annual income by requiring plans to disclose the amount of monthly annuity income participants could expect to get based on their account balance.
It would also encourage 401(k) plans to offer annuities by providing certain legal protections that currently don’t exist.
Ending work with a large 401k balance is highly desirable and so is the lump sum it represents. Very few workers are willing to use it all or even a part of the total to purchase a life annuity. The argument is understandable. What if I die shortly after I retire and all the money is lost?
On the other hand, the more likely scenario is you will live twenty or more years and during that period you must manage your lump sum to keep it growing, so you keep up with inflation and don’t out live your money.
Adding annuities to 401k plans is an important change we need.