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New Retirement Income Solutions
By JLP | February 25, 2008
Good morning. I’ll be out most of the morning but I wanted to go ahead and give you something interesting to read (emphasis mine):
The financial services industry has recently introduced new mutual funds that create income streams for retirees. While they’re not intended to be the sole solution for any given retiree, the funds aim to take some uncertainty out of the decumulation process. The timing is hardly a coincidence: The oldest among the nation’s 78 million baby boomers turn 62 this year, the first wave of what the Social Security Administration calls a “silver tsunami” to become eligible for Social Security benefits. Contrary to the popular conceit that boomers will reinvent retirement and never stop working completely, these older boomers are eager to retire, according to a recent study by the MetLife Mature Market Institute. Respondents were asked to describe the best aspects of being 62, and “retirement” and “not having to work” topped the list.
A big attraction of the new retirement-income mutual funds is that they offer the flexibility and liquidity that annuities lack. You can cash out of them or add new shares at any time. “In some ways a plain-vanilla, inflation-adjusted immediate annuity may be the best thing for people, but they don’t like it, so how do you respond?” Munnell asks. The financial services industry has responded with funds that offer regular income with varying payouts and strategies. Some aim to preserve principal while others liquidate it over a fixed horizon. Most are funds of funds.
That quote comes from an article in the February 2008 issue of Financial Planning. The article is about some of the new retirement income solutions that being created by financial service firms and mutual funds. From what I have read, I like this idea because it gives annuity providers some competition and with competition comes better products and hopefully lower fees.
Anyway, to get a handle on what I’m talking about read the article. I’ll write more on this topic later today.
UPDATE: If you’re interested, here is Money Magazine’s Walter Updegrave’s thoughts on managed payout funds.
Topics: Retirement Planning | 2 Comments »
February 25th, 2008 at 10:21 am
JLP,
what do you think about DBA – powershares agriculture?
Thx,
Joe
January 23rd, 2011 at 7:44 pm
Any plans on doing a follow up on manage payout mutual funds?
Paul