Income

Target date funds are receiving attention from the SEC, the DOL and Congress. The increased scrutiny is a result of the way that target date funds have performed during the market meltdown over the past year. As reported recently , in theory target date funds are supposed to provide a smooth and somewhat automated transition from more risky assets to less risky assets as people approach retirement. One of the problems is that the actual asset allocations for people approaching retirement varies...

A recent Pew Research survey indicates that over half of working adults age 50-64 plan to postpone their retirement in light of the impact that the financial crisis has had on their retirement savings. The survey indicated that recent investment losses--not levels of income--are the primary factor that leads to angst among those who are set to retire in the near-term: But regardless of income or age, those who have lost 40% or more of their investment nest eggs are roughly twice as likely as...

Colleges and universities have become more comfortable over the past several years with using gift annuities as a funding source. A gift annuity allows the college to secure a lump sum donation from a donor. In exchange, the donor receives lifetime income payments from the college. The ability to donate a lump sum while maintaining a source of income from those funds can be very attractive to the donor. This charitable donation funding approach has been growing steadily over the past several...

Investors seem to be aware of the fact that they need to hedge longevity risk . In other words, people are concerned about the risk of outliving their assets. Sales of deferred fixed annuities increased 60% in 2008. While many different types of annuity products may be used to hedge longevity risk, the longevity annuity may be optimal if the sole concern is in fact avoiding a scenario in which one outlives their money: "A 60-year-old with a $1 million portfolio but no pension might allocate...