Treasury Retirement Proposal Touts “Lifetime Income” Benefits

A proposal made this month by the U.S. Treasury aims to help retirees achieve financial security without outliving their means. By outlining changes to 401(k) annuities programs and disclosures, the treasury aims to make it easier for retirees to take advantage of annuities and use them in retirement planning. Lifetime income achieved through these annuities looks a lot like the lifetime income achieved by some kinds of reverse mortgages.

The Treasury Department’s proposal will “reduce regulatory burdens and make it easier for retirees to choose to receive their benefits as a stream of income in regular payments for as long as they live.

“These flexible ‘lifetime income’ options can provide greater certainty in retirement and minimize the risk of retirees outliving or underutilizing their retirement savings,” the Treasury stated.

The proposal encourages partial annuity options, acknowledging that today some retirees do not know what options are available to them. It also removes what it calls a “key obstacle” to longevity annuities by by removing a regulatory impediment to purchasing a deferred “longevity” annuity. Finally, it clarifies rules for plan rollovers to purchase annuities and spousal protection rules for 401(k) deferred annuities.

“When American workers take the responsible step of saving for retirement, we should do all we can to provide them with sensible, accessible choices for managing their hard-earned savings,” said Treasury Secretary Tim Geithner. “Having the ability to choose from expanded options will help retirees and their families achieve both greater value and security.”

View more on the proposals.

Written by Elizabeth Ecker

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