More retirement think tanks are getting on board with the idea of including annuities in 401(k) plans, but so far, only a handful of large employers have this as an option.
“They are complicated,” explains Alicia Munnell, director of the
Furthermore, investors are afraid an insurance carrier could go out of business, and plan sponsors don’t like the administrative headache of switching annuity investments when workers change jobs, added Robyn Credico, a consultant with Towers Watson.
In addition, the Retirement Security Project at
Nonetheless, the Obama administration recently came out in favor of annuities, and the Department of Labor and Treasury Department are gathering information on the feasibility of including annuities in 401(k)s.
The
Meanwhile, The Retirement Security Project recommends either automatic annuitization once workers reach age 45, with the right to opt out, or moving 50% of a worker’s savings into an annuity upon retirement.
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