Government Measures To Reduce Risks Of Nest Egg Depletion

Many employees are relying more on their 401K and IRA plans to supplement their retirement funds

, and less on company-provided pension plans. With the popularity of early distributions and other kinds of mishandling among cash-strapped employees, it's becoming more and more likely for many to mismanage their funds and run the risk of a prematurely depleted nest egg.

The current administration, as part of its efforts to curb the effects of the recession on the finances of its citizens, wants to promote the use of products that provide lifetime income to workers. These products include annuities and other tools similar to pensions, which work with an initial lump-sum payment that results in guaranteed regular income.

The Treasury and Labor departments of the administration are now looking for new ways to make annuities and similar products more attractive to workers. One recommendation is that a portion of an employee's contributions to his or her 401K plan be placed into an annuity that automatically begins giving regular payments once the worker retires.

Both departments also plan to discuss this and other proposals starting September 14. Other topics for the hearing are concerns about annuities being a priority investment, compared to other strategies and investments that can also give the employee income for his or her entire life. During the period when public comments were heard, many respondents were against the mandate on annuities, as few workers opt for these products once they've received the payouts from their retirement plans.

Experts still say that annuities and similar types of investments are viable tools that can make you enough money and reduce the risks of outliving your nest egg. Aside from different types of annuities, you can also consider longevity insurance and managed-payout funds, which are also recommended ways to augment your retirement finances.

by: Carina Smith

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