This distressing article highlights the issues pensions face meeting their promises to retirees. According to the article, 14% of the nations workforce still participates in some sort of employer sponsored, defined benefit plan. Yet, "The third quarter 2011 was the second worst in history for pension liabilities," due primarily to unrealistic assumptions and enduring low rates of return.
Is your pension in a similar state? Or worse, are you hoping for year after year of 10% compounding gains to rely on to turn into income? It might be time to rationalize expectations, and put true guaranteed income in place.
Judicious use of annuities can provide the floor of security and income for individuals. It only makes sense to use your assets to lock in the security you need, and not rely on underfunded pension plans that can’t come to grips with economic reality.
Here's the article:
It’s been a tough year for corporate pension plans. Weak stock markets and falling interest rates have left a $440 billion hole in the nation’s 100 largest plans, with the shortfall more than doubling in the third quarter…. Read On.