The Need For Steady Retirement Income Has Become Overwhelming
When I was a boy of 9, my widowed grandmother moved in with us. In those days, elderly parents were looked after by their kids. Years later, those kids became the elderly parents to be looked after. That?s the way it was, and it stayed that way, even into the 1960s.
But no more. Today, the kids are still great and still reliable. But they have their own busy, worrisome lives. Worse, maybe, than their parents ever had. So, wouldn?t it be better for all concerned if we elderly parents just moved into that nice, nearby retirement home? But oh, by the way, it?s very costly.
That leads me to the conclusion that the need for a reliable income stream when you retire is overwhelming.
Come to think of it, the insurance industry happens to be in The Reliable Income Stream Business. Or is it? The industry?s track record is pretty spotty, as Table 1 shows.
As is evident, there are 2 approaches to the income stream: (1) the defined benefit; and (2) the defined contribution. Only the former provides a pure vanilla guaranteed income stream. The latter provides it only if the accumulated contributions are adequate and are converted to lifetime income at retirement.
