Sensational Savings

As future retirees cope with longevity risk, a growing number of 401k plans include investment choices that enable savers to convert savings into retirement income.

Currently, 16 percent of employers offer annuities. Numbers are set to grow as insurance companies try to get a piece of the $1.5 trillion in assets the Investment Company Institute revealed was in employer-sponsored retirement plans last year.

Thinking of turning your 401k into steady income?

Consider whether your investments are focused on income or growth.

Courtney Cox, financial advisor at Jones Advisory Group, says many of her female clients either have more risk in their investments than they realize, or are so conservative that their cash is losing purchasing power sitting at today’s interest rates.

“Focus on protecting what you’ve worked so hard to build up and generating income that can keep up with inflation,” she advises.

Cox compares the idea to buying a home and then “hoping its value increases five percent annually, or renting it to a dependable tenant and collecting a check consistently.”

The market is similar. She says dividend performance over the past decade has been more dependable and consistent than “the capital gains roller coaster.”

Know your costs.

“Common investments like mutual funds and variable annuities can have undisclosed costs and be difficult to evaluate.”

To avoid losing money through fees, Cox suggests rolling over your company plan to an IRA. “This will almost always give you more investment choices and lower fee opportunities.”

With steady income, you may just be able to retire at the same standard of living.

Bonus PINK Link: Romancing Retirement.

How are you planning to spread your 401k?

By Sarah Grace Alexander

“There is a whole new kind of life ahead, full of experiences. Some call it retirement. I call it bliss.” Betty Sullivan