Wish you had a pension?

Wish you had a pension?How many times have you wished you had a pension and didn’t have all the worry and headaches of a 401(k)?  Before 1978 the predecessor to the 401(k) was the CODA and the CODA was used primarily by the highly compensated C-level employees.  Most employees had the peace of mind that if they worked all their life for one company their whole life they would be rewarded by the company who would provided for them via a pension.

However, that confidence was shaken when some companies didn’t make good on their promises to their employees.  As confidence eroded the people demanded congress act to protect employees retirement benefit and out of which the 401(k) was born.  Now the employee has a bulk of the responsibility of their funds and ultimately how prosperous their retirement will be.

The problem now is most people don’t have the interest or time to spend learning and maintaining their 401(k) funds the way they really need to (not that I blame them, life is busy!)  This is the reason that age based mutual funds have become very popular in retirement plans.  While the age based funds may help some people maintain an age appropriate portfolio it does nothing to address the underlying problem people want solved.

A pension has always been an insurance contract.  The contract works like this you have a group of employees and the employer who all contribute to the same pot of funds then the insurance company says “based on the funds being contributed and the number employees your have X retirement options.”  Those option usually include a lump sum or various monthly income options.  Once you choose an option you cannot change your mind at a later date.

While we cannot make your employer implement a pension plan, we can help you obtain some of the benefits associated with a pension plan and you get to choose the rules:

  1. Option to have a lump sum pay out at retirement or regular payout options you cannot outlive.
  2. Fixed guaranteed returns
  3. Financial stability of a large company (We only work with carriers that have a long history of keeping promises and maintaining superior financial ratings)
  4. Riders may be available to help you have your cake and eat it too!  If you have trouble making decisions or later wish you choose a different option this might be what you’re looking for.  A Guaranteed Minimum Withdrawal Benefit (GMWB) rider allows you have a promise of lifetime income while giving you the option to change your mind and take a lump sum of the remaining balance of your funds at a later date.

An annuity is NOT a pension but it can give you some of the benefits you may looking for with a pension.

If you have not started saving for retirement or you are not ready to starting taking income yet a Flexible Premium Differed Annuity (FPDA) may be the answer you’re looking for.

If you are ready to start taking income from your savings a FPDA with a GMWB rider, or a Single Premium Immediate Annuity (SPIA) may be what you are looking for.