New Treasury Rules Help Long-Retirement Planning | Harvard Business School by Robert Pozen
Published: December 10 2014
The United States Treasury recently amended its rules to encourage workers with retirement plans to purchase life annuities within these plans. Life annuities generally make fixed monthly payments from the date of retirement until the death of the purchaser.
For years, many economists have recommended that workers use all their retirement savings to buy life annuities in order to avoid outliving their savings. Nevertheless, few workers want to put their whole retirement nest egg into a life annuity.
Why? In one word, flexibility. Retired workers want to have substantial resources available to deal with medical emergencies or unexpected disasters during their retirement years.