The world is filled with investing indexes and benchmarks, and all professional investment managers measure their results relative to some type of performance standard such as the S&P 500.

On the retirement income front, though, similar gauges of performance are virtually non-existent.  The lack of a baseline performance measure is a problem for the industry because there is no established basis for comparison of asset decumulation strategies.

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:

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.

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.

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. 

A recent paper sponsored by the Society of actuaries provides an impressive and comprehensive review of retirement income-related research. 

The paper, titled Research and Reality – A Literature Review on Drawing Down Retirement Financial Savings, can be accessed by clicking here. 

Retirees have every reason to be an extremely risk averse bunch.  After all, most of them have an immediate or near-term need to draw income from their assets.  This need for income should result in zero tolerance for investment risk or reduction in value of the assets that are intended to produce the retirement income.

Anyone thinking about retirement income should pick-up a copy of Retirement Portfolios by Michael Zwecher.  This recommendation applies to both financial services professionals and consumers who are approaching or at retirement. 

Zwecher’s book is the definitive guide to constructing and maintaining portfolios that generate sustainable retirement income.  

Dimensional Fund Advisors (DFA) appears to be ramping-up its retirement income efforts.

Advisor One reported on the recent DFA-sponsored retirement planning conference in Chicago.

DFA's retirement income efforts appear to be largely focused on the defined contribution or 401k market.  DFA's retirement income offering is named "Managed DC."  The product appears to be offered exclusively in the retirement plan market.

DFA has a huge presence in the asset accumulation space with $232 billion in assets under management.

At the request of Wisconsin Senator Herb Kohl, the Government Accountability Office (GAO) just released a study that provides an assessment of the current state of the retirement income market in the United States.

For those interested in retirement income, the study is full of interesting data and conclusions.  Some of the highlights include: