[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]More isn’t always better. If the Senate passes the SECURE Act, employers who offer 401(k) plans will be required to integrate annuities in their already existing retirement plans.
The SECURE (Setting Every Community Up for Retirement Enhancement) Act would reduce some of the burden for employers who will need to start offering them. So what exactly is an annuity, and why do employers need to add them into their employee retirement plans?
Virtually a contract between an individual and an insurance company, annuities require that you make a series of income payments for a set period of time in return for a premium already paid. While annuities can have many variations, the main goal is to provide individuals with a consistent stream of income during retirement. Founder of Wealth Compass Financial Steve Nuckols says that the primary function of the income payments are, so investors continue to get paid so long as the contract is in force, with minimizes the risk of them outliving their money.
In theory, this all makes sense, but annuities are actually quite complex. Author of RetireSmart!, Mark Anthony Grimaldi, says that outside of the fixed monthly income, individuals are not allowed to withdraw additional funds from an annuity. Annuities can also be costly, and because of the fixed nature of the monthly payment, inflation could impact your purchasing power.
Integrating annuities into 401(k) retirement plans is a great idea, but one that hasn’t been fully developed yet. President of Essential Advisory Services Matthew Schechner advises that professionals wait and see how employers handle this situation before trying it out.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36055″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
