U.S. Government Accountability Office issues report titled – Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices

By William Baker, J.D —————–>

Increased life expectancy is a good news / bad news situation. The “good news” is that you live longer. The “bad news” is that you may outlive your assets. Nobody is immune to this possibility. Even what may appear to be the most solid, reliable retirement plan can fail. One way to protect against the possibility of outliving your assets is by spreading the risk through diversification.

On June 7, 2011,  U.S. Government Accountability Office (GAO) issured a report titled, Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices. In their report, the GAO found:

“Financial experts GAO interviewed typically recommended that retirees systematically draw down their savings and convert a portion of their savings into an income annuity to cover necessary expenses, or opt for the annuity provided by an employer-sponsored DB pension instead of a lump sum withdrawal. Experts also recommended that individuals delay receipt of Social Security benefits until reaching at least full retirement age and, in some cases, continue to work and save, if possible.”

Overall, the GAO Retirement Income report made a strong case for using annuities as a retirement tool. Annuities are a great financial product. However, they are significantly more complex than other investments such as bank CDs, bonds or stocks. Because of this, before you invest in an annuity you need to do your homework to derive the optimal amount of benefit from any annuity product you might purchase.