Retirement Security

As older Americans retire, they may face rising health care costs, inflation, and the risk of outliving their assets. Those entering retirement today typically face greater responsibility for managing their retirement savings than those who retired in the past. Lifetime income products can help older Americans ensure they have income throughout their retirement. Variable annuities with guaranteed lifetime withdrawal benefits (VA/GLWBs) and contingent deferred annuities (CDAs), two...
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As older Americans retire, they may face rising health care costs, inflation, and the risk of outliving their assets. Those entering retirement today typically face greater responsibility for managing their retirement savings than those who retired in the past. Lifetime income products can help older Americans ensure they have income throughout their retirement. Variable annuities with guaranteed lifetime withdrawal benefits (VA/GLWBs) and contingent deferred annuities (CDAs), two such products, may provide unique benefits to consumers. According to industry participants, while annuities with GLWBs have been sold for a number of years, CDAs are relatively new and are not widely available. This report (1) compares the features of VA/GLWBs and CDAs and examines potential benefits and risks to consumers and potential risks to insurers,;and (2) examines the regulation of these products and the extent to which regulations address risks to consumers. Tables and figures.