By Cyril Tuohy
Lincoln Financial Group, heeding the call to give retirement plan participants more options during the withdrawal or drawdown phase of retirement portfolios, has introduced a guaranteed withdrawal benefit option for group retirement plans, the company has announced.
Retirement plan experts have called for more choices to guarantee retirees a secure monthly income, typically by investing in an annuity.
Lincoln’s Secured Retirement Income is offered as a group variable annuity, and the program is designed to protect retirement savings when the market declines, while allowing for the participation in rising markets.
The carrier’s website says the company works closely with plan sponsors, advisors and consultants to add the Secured Retirement Option “either as a standalone investment or included in the glide path of a custom target-date portfolio.”
Chuck Cornelio, president of Lincoln Financial’s Retirement Plan Services, said in a statement that for years the retirement industry has focused on the accumulation phase. Equally important, though, is to have a strategy for the drawdown phase.
“Now it’s equally important to have a strategy for converting savings into lifetime income to help people prepare for and live in retirement successfully,” he said in a news release.
Retirement experts have testified before Congress about the need for more retirement plan withdrawal options.
With the advent of the defined contribution retirement plan model in the 1980s, employer-sponsored plans have focused on how to generate more assets by offering growth-oriented mutual funds, balanced funds and even money market funds.
The retirement plan industry, for example, has come up with all sorts of ways to increase the amount of money flowing into retirement accounts through pre-tax savings, company matches and automatic savings escalation features.
Very few plans, however, have offered participants the same options with regard to the drawdown period. For example, plans rarely show investors how much they would receive every month if they were to invest in one kind of investment over another beginning on a certain date,
But in the wake of the financial crisis, when millions of retirees saw their account values plummet, more attention has shifted to the withdrawal phase.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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