Lifetime income – the SECURE Act

Under the SECURE Act there is a lifetime income disclosure requirement.

As soon as the Department of Labor sets assumptions for estimates and creates a model disclosure, plan sponsors will be required to provide participants with lifetime income disclosures. The communications will show the amount of monthly income that participants’ accounts may provide if invested in annuities that offer lifetime income.

Why wait? There are many tools that will provide that estimate now. Here’s an example of one of those calculators. Such estimates will show you the monthly income you might expect from what you have accumulated in your retirement account.

For example, if you want to retire at age 65 with a monthly income of $5,000, you will need about $989,965 (variable by state and gender).,


  1. Some people would do very well with the guaranteed monthly income due to their failure to properly manage their money. It is a good option for those people.

    However, I entered the actual value of my 401k into the linked calculator with a two year waiting period before withdraws because that is what I am currently doing. I am waiting two more years before I plan on withdrawing from my 401k plan. I was shocked at what I considered the low payout. In some of the choices, the minimum payout guaranteed was less than my initial investment. Reading the footnotes, in some of the choices, if I died, the insurance company keeps the principle in others there was a provision for beneficiaries. But the most shocking footnote was that the money was not insured, and may lose value. I realized that is very highly unlikely, but that kind of kills the promise of something that is “guaranteed”. If it is not “guaranteed”, I might as well leave it in an IRA or non-IRA index investment fund. Using the 4% withdrawal rule, I would have gotten more money and still had more than my initial original investment. I also could make less too.

    Now I realize that the assumed payout on the site was the minimum payout and it may be more, but it illustrated the high cost of annuities. Since they are sold on commission, I see people being sold the wrong annuity product for their needs but the salesmen get a high commission. Several years ago, I was able to stop my 85-yr old mother-in-law from buying annuity with a 2 year waiting period. She would not have access to her money for two years. It made no sense at her age to tie up all her savings. This was done by her “too big to fail bank with one of the lowest interest rates” banker when she was renewing her CD’s. Grant it, the CD’s where not paying great interest but it was a very safe, insured, and accessible.

    I see more people ripped off by the insurance companies than those who are going to be helped. However, the option for rolling an IRA or 401K should be available but the people who truly need will not have saved enough money or they will not take advantage of the annuity. It is a hollow high-hope solution for the retirement problem.


  2. Why wait? Because the estimate will be wrong, misleading, and do more harm than good!

    People don’t want estimates, they want estimates they can rely on, use in their planning!

    That is not what SECURE mandates.

    Consider someone age 65 today, who went through 12 different employers, and received estimates from their employer sponsored plans over the past 40 years, where each used different criteria, while the monies rolled over to an IRA were not required to provide any such income projection.

    40 years ago, in 1980, the annuity pricing included double digit interest rates. So, while the account kept growing, the income estimate at age 65 kept declining.

    How good were those estimates?

    And, since a lot of assets leak out of qualified plans and IRA’s … how good were those estimates?

    This is a sop to insurance companies who want to sell annuities.


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