Posted on September 07, 2006 at 08:09:02:
The best thing about a guaranteed-benefit pension was that it was supposed to last your whole life. Trouble is, those pensions are disappearing. Many firms are freezing pensions, and more and more companies limit their obligation to match on contributions to a 401(k) – if that.
There’s still a way to get yourself a guaranteed lifetime income stream, but you’ll have to fund it yourself. Best bet usually is to buy an immediate-payment annuity with part of the proceeds of your 401(k) or other retirement account. Research the choice carefully, perhaps with the help of a financial advisor. Part of the income may even be tax-free as a return of investment.
Rather than lock up all your savings, figure what you have coming in from dependable sources and how much you will need; then find the best buy in an annuity to make up the difference. Some choose to buy annuities in stages to take advantage of interest changes.