As large numbers of baby boomers approach retirement, a new—and important issue is those retirees will make their 401(k) accounts or rollover IRAs last for their lifetimes. Participant life expectancies at age 65 range from 17 to 20 years. Most people are poorly prepared to manage and withdraw their money in a manner that will last that long. To make matters even worse, for a couple, both 65, there is about a 25% probability that one will live to his or her mid-90’s, or 30 years.

During the accumulation—or working—phase, most participants have the option of working a few more years if they learn that their accounts are too small to retire...thereby adjusting to the realities. However, a retiree probably won’t learn that his or her money is running out until age 75 or older...when few, if any adjustments—other than a lower standard of living—can be made. In other words, the “penalty” for being wrong is much more severe in retirement than while working.

In response to this new realization, providers are developing guaranteed products like accumulation annuities and guaranteed withdrawal insurance (commonly called GMWBs, GLWBs and GIFLs) and non-guaranteed investments, like managed payout funds.

In addition, academics are doing research on these issues and industry experts are forming organizations to evaluate the products and services.

Our firm is participating in the efforts of a nonprofit research organization made up of top consultants, investment advisors and attorneys to analyze and report on products for retirement income in an analytical and nonpartisan manner. That organization is the Institutional Retirement Income Council (IRIC). Its website is

We believe that retirement income—and the products and services that support lifetime income—will be one of the major 401(k) issues of the next 10 years.

Source: The Report to Plan Sponsor