Today's workers face two hurdles: how to accumulate savings for retirement and how to manage savings to last throughout retirement. Annuities offer solutions to both sides of the retirement equation. They provide ways to save and then can turn savings into a steady stream of income for life.
There has been increased interest among policy-makers about the role annuities play in creating lifetime income in retirement. The Small Business Lending Fund Act—signed into law in October 2010—makes it easier for individual annuity owners to annuitize a portion of their annuity while the rest continues to grow. The Departments of Labor and Treasury are expected to issue guidance in 2012 that would facilitate the use of annuities in retirement plans. Notably, our nation's largest employer—the federal government—in 2011 began to annually illustrate to participants in its defined contribution plan (the Thrift Savings Plan) how much monthly annuity income workers can expect in retirement from current account balances.
Policy-makers should continue to explore ways to encourage Americans to plan for a lifetime income in retirement. ACLI supports educational initiatives that highlight the role annuities can play in helping workers save and guarantee lifetime income in retirement—especially those without access to workplace retirement plans.
We support initiatives that encourage defined contribution plan sponsors to include annuity distribution options in their plans. ACLI also supports the Lifetime Income Disclosure Act, which would require defined contribution plan sponsors to provide workers with an illustration of how their retirement savings translate into guaranteed monthly income payments in retirement.