"Failure to Annuitize Assets Increases Risk" Boston College Center for Retirement Research-Annuity News Now

Scott interviews Anthony Webb,  Research Economist at Boston College's Center for Retirement Research.

(Insurancenewsnet)  Though many households focus on accumulating assets for retirement, it is equally important that they have a plan in place to help them get as much as possible out of those assets during retirement. New analysis of the National Retirement Risk Index (NRRI) by the Center for Retirement Research at Boston College, and sponsored by Nationwide Mutual Insurance Company, shows the percent of households ‘at risk’ for retirement jumps from 51 to 60 percent when they live off of the interest from their assets instead of purchasing an inflation-indexed annuity to provide a guaranteed stream of retirement income.

The NRRI measures the share of American households ‘at risk’ of being unable to maintain their pre-retirement standard of living in retirement. The Index uses the conservative assumptions that people work to age 65, receive income from reverse mortgages on their homes and annuitize all of their financial assets. The new fact sheet examined what would happen if households did not purchase an annuity to provide lifelong income.

“It’s critical for today’s workers to not only invest for retirement but to also have a plan in place to manage their assets once they retire,” said Center Director Alicia H. Munnell . “Purchasing an annuity is one way that households can ensure that they don’t outlive their assets but the reality is that most people do not choose this option. We decided to explore what impact removing the annuitization assumption would have on the retirement outlook of American households in the Index.”

The full report is available at the Center for Retirement Research at Boston College.

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