Robert Klein, founder of Retirement Income Center in Newport Beach, Calif., has proposed a new type of annuity that would provide a tax credit. He noted it also would provide lifetime income for people rolling over 401(k)s or other retirement savings.
“People don’t deal with how to spend that money until there is an emergency, such as a health incident,” he said. “Many people are afraid to spend the money they have so they do not live the lifestyle they could."
“A big part of the problem is that managing money is complicated and people do not trust themselves to do it, so nothing gets done,” Sanzenbacher said. “Longevity risks were bad for employers when they funded defined benefit pension plans, but the risks are even worse for individuals. Policy makers are going to have to deal with this issue.”
“It is tough to say how this will play out,” Copeland added.