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.

Pacific Investment Management Company (Pimco) founder and co-chief investment officer Bill Gross offered a revised view of the global investing landscape in a letter published on the company’s website. 

As the manager of the Pimco Total Return Fund, Gross’s 2011 investment decisions were driven in part by the “new normal” thesis. 

The new normal view suggests that investors should seek emerging market debt because developed countries will experience a prolonged period of sluggish growth, high unemployment and inflation. 

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.

Metlife posted record variable annuity sales of $8.6 billion during the most recent quarter.  The VA sales record represents an 86 percent increase from the same period a year ago.

MetLife also announced that it will be lowering the returns offered on future variable annuity offerings in an effort to “re-price and improve the risk profile” of their product offerings.

Record low interest rates have made it difficult to sustain the richer product features contained in the current variable annuity offerings.

The following is a summary of stories related to the recent earnings warning from Canadian financial services company Sun Life.

Defined benefit pension plans are the traditional and increasingly rare type of pension plans offered through employers.

In contrast to defined contribution pension plans such as the 401(k), participants in defined benefit (“DB”) plans receive contractually guaranteed income and assume none of the risks (investment risk, interest rate risk, longevity risk, etc) associated with producing that lifetime income stream.

The problem is that defined benefit plans are scarce, and many of those that do still exist are in tough shape.

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. 

John Hancock Annuities announced the release of a new fixed annuity product that provides owners with inflation protection. 

The “Inflation Guard” product offers principal protection through a fixed interest rate that is guaranteed through the first year of the contract. 

After the first year, the interest rate is floating.  This floating rate is based on a rate of inflation that is derived from the year-over-year change in the Consumer Price Index-Urban or “CPI-U.”  

As discussed in a recent post, ultra low interest rates are an enormous burden for retirees.  Low interest rates make it difficult to produce reasonable levels of yield and increase the present value of future liabilities (retirement spending is a liability).

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.