Making Your Nest Egg Last

September 14th, 2006  |  Published in 401K, Annuities

Lump sum illusion, a term used by Olivia Mitchell, University of Pennsylvania insurance professor and executive director of the Pension Research Council; is when someone on the cusp of retirement gets when they look at their 401(k) or pension fund and sees all those zeroes. While it’s nice to have a large nest egg, one must remember that the funds in that account are supposed to last you the rest of your days – which could be, hopefully, many decades.

In an article on CNN Money, Walter Updegrave identifies three options:
1) Investing it on your own and withdrawing when you need to.
2) Putting it into an annuity and withdrawing income on a schedule.
3) Both (split your funds into two, investing some and putting the rest into an annuity).

Here is an interesting graphic from the article:

Retirement funds annuities and investing, comparison

  

Comments are closed.