The Real Value of Annuities for Mass Affluent Retirees
October 31, 2022 by Jason Fichtner and Michael Finke
Recent research released by Morningstar addresses the potential benefits of annuities in defined contribution (DC) retirement plans. This is a much-needed analysis at an important time when many employers and/or advisors are considering whether to add an annuity to a DC plan.
The authors primarily judge the benefit of annuities using a failure rate method, which measures the probability of running out of savings. Failure rate analyses are an imperfect measure not commonly used by economists to estimate optimal retirement income strategies.