The U.S. Treasury Department said on Friday it was tweaking its policy for retirement funds to encourage savers to buy annuities, a measure aimed to keep them from outliving their savings.
The department and the Internal Revenue Service will let retirement funds offer long-term deferred annuities as a default investment in 401(k) retirement accounts. The guidance builds on the tax break the Treasury announced in July for retirement savers who want to buy the annuities.
For people saving for retirement, purchasing an annuity is a tool for locking in a steady outcome in case they live longer than they plan.
"By encouraging the use of income annuities, today's guidance can help retirees protect themselves from outliving their savings," J. Mark Iwry, Treasury deputy assistant secretary for retirement and health policy, said in a statement.
It's wonderful to see the U.S. government recommending safe investment choices. I wonder what took so long when annuities have been around since the Ancient Egyptians started them. With interest rates at long term lows, consumers have been forced into the stock market to achieve better returns on their money. Now facing retirement, many want to jump off the roller coaster of Wall Street and capture their gain. Stocks are intriguing but not so much now that they don't want risk, many are still scarred from 2008.
An annuity is the ONLY financial product to guarantee you won't outlive your money. No other financial product offers this guarantee and is safe for your money. You don't have to worry about the stock market returns, which is one of my clients' favorite aspects of it. By the time clients buy annuities, they have typically been involved in the stock market and rode the wave up, down, and sideways. Retirement requires safe money investments, but they still want the growth. Fixed Indexed Annuities are a welcome solution for many. Guaranteed growth and a floor against investment losses combined with a future income stream is an attraction to anyone seeking peace of mind. If you've never considered an annuity for one of your retirement investments, I encourage you to ask me for more educational materials to see if this insurance product is right for your situation.