The Senate Special Committee on Aging held hearings about the challenges facing a new generation of retirees. Sen. Herb Kohl (D-Wisc.), who chairs the committee, said retirees have to become increasingly self-reliant.

“The pension landscape has changed considerably over the past several decades, with defined contribution savings plans replacing defined benefit plans, which provided individuals a payment throughout their retirement,” Kohl said. “While individuals have more control of their finances under this new system, they face complicated investment choices. With Americans living longer, the stakes are high for not adequately managing one’s savings.”

Testifying on behalf of the American Council of Life Insurers (ACLI), Bill Mullaney, president of the U.S. Business division for New York-based Metropolitan Life Insurance Co., told committee members that life insurers are well-positioned to help future retirees.

“For many people, defined contribution plans such as 401(k)s have become their primary retirement savings vehicle,” Mullaney said. “Guaranteed lifetime income products shift the risk of outliving one’s savings to a life insurer. Annuities with optional guaranteed living benefits can provide protection against both longevity and investment risks.”

Mullaney said ACLI supports several policy changes to help retirees avoid outliving their savings, including S. 2832, the Lifetime Income Disclosure Act, and H.R. 2748, the Retirement Security Needs Lifetime Pay Act.

In written testimony, the American Academy of Actuaries stressed the importance of educating the public.

“Education about the financial impact of longevity risk is one of the foundations on which progress must be built,” they wrote. “Longevity risk is a true and significant risk. It is far more economically efficient to address longevity risk through the methods of risk pooling rather than through individuals saving additional amounts to cover the possibility of living beyond life expectancy (which roughly half the population is anticipated to do).”

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