"Unlike traditional pensions, which provide participants with a steady stream of income for as long as they live, 401(k) plans generally pay out benefits as lump sums. Lump-sum payments mean that retirees have to decide how much to withdraw each year. That's really hard to do, because people don't know how long they are going to live. If they live longer than expected, they face the horrible prospect of running out of money in old age...The way to have the highest standard of living in retirement and not run out of money is to buy an annuity."
Source: Investment News
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