Savings2Income Comments on 401(k) Plan that Incorporates Variable Annuities for its Minimum Payout Feature

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Savings2Income releases a statement addressing a new retirement plan put in place by Hartford-based aerospace and building technology company, United Technologies.

On November 28, Savings2Income responds to an article recently published in the New York Times that focuses on one company’s attempt to help participants by incorporating variable annuities in its 401(k) plan for its minimum payment feature.

According to the article, aerospace and building technology company, United Technologies, seeks to benefit retirees by including “annuities within the walls of its 401(k).” This would better ensure employees a “minimum level of income for life, starting at retirement,” by shifting the worker’s savings into variable annuities midcareer.

This fund contains variable annuities guaranteeing that workers can “pull out a set minimum amount each year,” reports [The New York Times.

Jerry Golden, considered the father of the modern [variable annuity, introduced the first living benefit guarantee in 1995 in a product called the Accumulator which eventually reached $15 billion in annual worldwide sales. Although he applauds the innovation and extension of the design into 401(k) plans, he believes it is misdirected.

“My view is that the more efficient approach is to have low cost, diversified investment models pre-retirement and a gradual conversion to Guaranteed Income through fixed payout annuities once the retiree begins to draw income. It’s transparent and flexible, and based on our analysis, delivers better long term results,” Golden said.

An innovative retirement planning method called Savings2Income (S2I) created by Jerry Golden seeks to provide a clear path to retirement security for those saving for retirement, soon to retire, and recently retired. S2I incorporates Rollover IRA savings, personal retirement savings held outside an IRA or 401(k) plan and Social Security into an integrated solution.


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Chris Spring

John Mulqueen
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