For those seeking to spend more in retirement than the bond yield curve can support, the alternative to seeking risk premium through an aggressive asset allocation is to pool risk through insurance. Income annuities are the simplest type of insurance products which trade a lump-sum payment for protected lifetime income. The ability to convert a portion of assets (as it is not an all-or-nothing decision) into a guaranteed income stream is a fundamental retirement income tool which contrasts with an investment portfolio in terms of the advantages and disadvantages for managing retirement risks.
We start our discussion of annuities with […]
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