Senate Panel Learns About Income Planning

Managing investment risk is difficult even for the professionals who run defined benefit pension plans, and "an individual attempting to manage that risk himself is attempting the near impossible," Henrikson argued.

Instead, Henrikson said, workers should be encouraged to join risk pools for their retirement planning.

Forming risk pools would provide the advantage of scale enjoyed by defined benefit plan managers while easing workers' retirement risk-management burden.

"It's a solution for retirees that have diligently saved," Henrikson said, repeating that "no individual, no matter how smart or savvy, can go it alone."

Stein proposed encouraging seniors to buy annuities, which would help provide a stream of income beyond Social Security payments.

"The annuity, whether fixed or variable, provides income that by definition will last until the holder of the annuity has entered a place where money is, presumably, not needed," Stein said.

Stein recommend improving the tax status of annuities.

"While the investments in them compound tax free, the contingent gains from interest, dividends and capital gains are taxed at ordinary income rates as withdrawn," Stein said. "This is in stark contrast to other investments in non-tax favored investments, which actually can have lower tax rates than annuities which are supposedly tax-favored."