How to Turn Your Nest Egg Into Steady Payments
February 4, 2020 by Anne Tergesen
Many Americans look with longing at old-fashioned pension plans, which cover a dwindling share of the workforce.
After all, aside from providing a guaranteed monthly paycheck for life, pensions spare retirees the hassle and anxiety of figuring out how to make their nest eggs last.
Now the retirement paycheck is staging a comeback—inside the 401(k).
As baby boomers retire and withdraw their nest eggs, 401(k) plans are losing assets. Employers are adding income-producing investments and services to plans in part to persuade older workers—who tend to have the largest balances—to keep their money in the 401(k) rather than move it to an individual retirement account.
One-third of plan sponsors now offer retirement-income investments or calculators, up from 11% in 2018, according to investment-consulting firm Callan LLC. The trend is likely to get a boost from a law that went into effect on Jan. 1 that makes it easier for 401(k) plans to offer annuities, insurance contracts that convert savings into lifelong payments, similar to a paycheck.