The Treasury Department just released a proposed set of regulations that could have a meaningful impact on the retirement income market in the U.S.

The Treasury’s guidance package builds on feedback received in response to the request for comments issued by the Labor and Treasury Departments last fall.

The proposed regulations appear to be squarely focused on longevity risk.  The basis for this concern—particularly as it pertains to the middle class—is summarized in the following chart:

As the manager of the largest bond fund in the world and a founder of PIMCO, Bill Gross is a leading authority on all things related to yield.

Since retirement finances are fundamentally about generating income from accumulated assets, retirees should care greatly about any comments and insights from Gross.  This is especially true since the world is starved for yield.

Gross regularly shares his insights through commentary on the PIMCO website.

Is there a sense of “swimming upstream” when trying to propagate goal-based investing--as described in your new book Risk Less and Prosper--among existing financial advisors? Conventional practices and economic incentives are so heavily skewed towards modern portfolio theory and growing assets under management. 

Liquidity or lack thereof tends to be a major concern when it comes to annuities.

Many financial advisors and consumers are reluctant to use annuities because money allocated to annuity products tends to be tied-up and inaccessible for a period of time.  In other words, annuities lack liquidity or are “illiquid.”

In contrast, exchange traded funds (ETF) or shares of IBM stock are highly liquid as they can almost always be easily sold for cash.   

Investment News columnist Darla Mercado wrote an interesting piece of the difficulty of making meaningful comparisons among annuities and related retirement income products.

Mercado focuses on the challenges created by the lack of benchmarks in the retirement income industry.

Unlike the investment industry where benchmarking and transparency of product features are standard, lifetime income products are opaque and complex.

One way to evaluate a pension buyout involves determining what your future pension payments are worth today and then comparing that value to the buyout offer.

In other words, compare the lump sum pension buyout offer to what would you have to pay today to buy and annuity that locks-in a future stream of income that lasts for the rest of your life.

The Lifetime Income Disclosure Act introduced by the U.S. Senate last year would require 401k plan sponsors (employers) to provide plan participants (employees) with estimates of the amount of lifetime income that would be generated by their account balances.

The UC Berkeley Center for Labor Research and Education just released an interesting research report titled “Meeting California’s Retirement Security Challenge.”

The report has an introduction written by Jacob Hacker—a Political Science professor at Yale University.

Hacker’s introduction focuses on what he refers to as the “Great Risk Shift” and is appropriately titled “The Coming Age of Retirement Insecurity.”

Retirees and those saving for retirement should think of themselves as the managers of their own personal pension plan.  

Many people used to have access to a traditional, defined benefit pension plan through their employers.  With a defined benefit pension plan, someone else (an employer or professional managers hired by an employer) assumes responsibility for managing plan contributions, investments and income distributions. 

There is an interesting blog that appears to be affiliated with the British pension consulting firm Redington.  

The “Red Blog” offers pension-related content from a group of authors who are both formally and informally associated with Redington. 

Not surprisingly, longevity trends and longevity risk are prominent topics on the Red Blog. 

The design of the blog and the visual representation of dry and fairly abstract topics are unique.