New type of retirement plans cut risk of outliving your money — but there’s a catch
Perhaps the biggest fear of people saving for retirement is outliving their money. But paradoxically, that fear can create a second problem: saving too much.
Studies have found some people are so worried about running out of money that their balances grow even after retirement.
Thus the challenging retirement conundrum: Save too little and risk the poorhouse; save too much and you could die before you have the chance to enjoy the golden years you spent an entire career saving toward.
People struggling with this decision can use some or all of their retirement savings to buy an annuity from an insurance company that will pay them an annual income for life. But guaranteed income annuities have not been a popular choice.
People don’t want to give up control of their money. Many worry about dying early and not getting their money’s worth, and compared with the amount of income generated in the old days of high interest rates, annuities are expensive.
Now there is another, more cost-effective way to generate income for life — one that will allow you to maintain control of most of your money and won’t see the bulk of your savings go to an insurance company if you do die unexpectedly early.
It’s called an Advanced Life Deferred Annuity, or ALDA.
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