Target-Date Funds With Annuities Are Gaining Ground. Is That Good for Your Retirement Plan?
Summary
Host Ivana Hampton interviews Morningstar’s Jason Kephart about target-date funds with built-in annuities gaining traction in 401(k) plans. They discuss how these funds offer guaranteed lifetime income to combat longevity risk, contrasting simpler plan-based options with complex retail annuities. The episode explores trade-offs like lost liquidity and opaque fees, while noting recent regulatory guidance and Vanguard’s entry are driving momentum for these hybrid investment solutions.
Topics discussed
Sponsor: Vanguard bonds and institutional quality
Introduction: Target-date funds with annuities
What annuities are and why they have a bad reputation
DOL rule and benefits of annuities in 401(k)s
Vanguard's entry and market momentum
Sponsor: Vanguard bonds and institutional quality
Income annuities vs. guaranteed lifetime withdrawal benefits
Income annuity providers and trade-offs
Guaranteed withdrawal benefit providers and trade-offs
How savers should decide on annuitizing 401(k) assets
Morningstar's rating plans and investor takeaways
Closing remarks and show credits
Legal and investment risk disclosures
Sponsor: Vanguard bonds and institutional quality
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