With retirement income management becoming the primary objective of many investors, it's time for new investment benchmarks which reflect that. For decades, investors have been using the S&P 500 or the Dow Jones Industrial Average as defaults for investment performance. But constructing portfolios that track those benchmarks is of little value for investors who must live off the returns on their portfolios.
With the technological advancements in money management platforms and payroll systems, one has to wonder whether the costs associated with ERISA compliance could be removed from the retirement plan system. If we could safely remove those costs, it's likely we could help employees accumulate between 20% and 30% more money for retirement. So it's worth considering.
In my <a href= http://www.investmentnews.com/article/20090716/REG/907159988>last column</a>, I provided an analysis of the income guarantees from a life-only, immediate annuity versus the likelihood of running out of money if you kept your retirement savings invested in the markets. I received a lot of comments on that column, and I thought I'd respond to several of them.
With the decline in the stock market over the last year, there is renewed interest in lifetime income guarantees for retirees. So, does it make sense to annuitize retirement money or roll the dice with market based returns?
Safety and security for retired investors have been overrated, and we need to think differently about these concepts and about diversification.
