Scholar: Women Should Ease Up On Stocks

If the stock market and bond market do poorly, then the retirement savings might run out early even if a retiree is careful with her money, Babbel writes.

Recent studies have shown that, "contrary to conventional wisdom, when there is uncertainty about the long-term expected returns in stocks (which there certainly is), longer investment horizons, such as those for retiring individuals, imply substantially lower allocations to stocks than those usually suggested," Babbel writes. "Those studies also show that most investors, even professional money managers, substantially under-perform the stock indices upon which many advisors base their recommendations for taking greater financial risk."

Buying immediate income annuities from solid insurers with relatively low costs can result in returns that are much higher than the returns from bonds or bank certificates of deposit with a much lower level of risk, Babbel contends.

Babbel writes that the main barriers to increasing sales of immediate annuities seem to be the bad publicity that deferred annuities have received over the years and consumers' tendency to want to hold on to lump sums of cash.

The solution is for consumers to look for income annuities that offer holders features such as death benefits and the ability to withdraw lump sums to cope with genuine emergencies, Babbel writes.