ISCEBS Benefits Quarterly – Retirement—A Risky Business

There is an abundance of risks related to retirement and, in the 401(k) world in which we live, these risks generally fall on the shoulders of the individual. Employers have done an effective job of educating employees about the risks related to the accumulation phase of retirement- the need to save for retirement and invest those assets appropriately. This success, however, has not translated to the decumulation phase of retirement. Decumulation risks include such esoteric concepts as longevity risk, interest rate risk and inflation risk. These risks are interrelated and complex, making them difficult to explain to non-financially savvy individuals. Can workers be successfully educated regarding these decumulation concerns? In addition, are there auto-matic features that should be considered to help steer retirees and near-retirees to suitable actions?
by Kenneth F. Hohman, Findley