Risks that Can Ruin a Retirement, Part II

In retirement, "risk" can turn from an object of pursuit to an object of avoidance. In the second installment of a two-part article, our guest columnist continues his discussion of financial and other risks that retirees and advisors should anticipate.
Anecdotal Evidence

The Incredible Shrinking Income Rider

Several variable annuity issuers offer optional income riders that allow a 7% or 8% withdrawal rate at age 70 unless or until the account value falls to zero, at which point the withdrawal rate drops to 4% or 3%. It seems like a risk-shift back to the client.

Surrender rates on some FIAs tick higher

While interest rate hikes tend to drive surrenders from fixed indexed annuity contracts, surrenders decline when a contract's lifetime income benefits are 'in the money,' studies by Ruark Consulting show. (Pictured: Ruark CEO Tim Paris.

Honorable Mention

Prudential promotes “sidecar” savings plan for emergencies; Student loan payments are eligible for partial match in Travelers 401(k) plan; Athene attributes losses to adverse interest rate, equity market conditions.

Risky Retirement Business

'The returns on external sovereign bonds (largely bonds issued by emerging market countries and now-advanced economies) have been sufficiently high to compensate investors for risk,' write these co-researchers. (Pictured: Reinhart)

Retail investors reach for income when interest rates fall

A one percentage point drop in the federal funds rate is associated, over the following three years, with a five percent increase in the inflows to stock mutual funds with high income yields, according to a new paper from the National Bureau of Economic Research.
International

Ireland to auto-enroll workers into retirement plans

Ireland's plan also calls for auto-escalation. By 2028, the total contribution for each member would be 12% of salary a year. The government will add 2%, for a total of 14% of salary, to a cap of €75,000 ($84,726).

COVER STORIES YOU MAY HAVE MISSED

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Risks That Can Ruin a Retirement

In the first of a two-article series, the retirement expert, author and editor enumerates and describes the many risks that retirees face. (Spoiler alert: Mortality is not one of them.)
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