Annuities and Your Nest Egg: Reforms to Promote Optimal Annuitization of Retirement Capital

Retiring babyboomers are driving a shift from retirement-fund accumulation to decumulation, but they need better choices to protect against longevity risk. The author says to enhance retirees' options, policy reforms should level the playing field for annuity products and promote market-driven variety of choice, thus ensuring retirees have at least some funds available to them for the long haul. Policy changes should improve the "infrastructure" for decumulation products by gathering high-quality mortality data and ensuring access to that data for annuity pricing. Policy should also provide the proverbial level playing field by integrating insurance, banking, pension, and tax regulations so these are neutral factors in the consumer decision to annuitize. Other reforms should enhance the ability of private annuity sellers to offer a range of decumulation products and promote consumer education.