On CNNMoney, Penelope Wang suggests that buying immediate annuities with your 401(k) money may be a good bet after you retire. Employers often pay out 401(k) accounts in a lump sum for convenience purposes, but many people struggle to make that money last throughout their retirement. Penelope says that there is even evidence that retirees may be happier when they recieve regular pension-like payments! She claims that they aren’t as popular as you would expect due to the complexity of the annuity market.
Some people are calling for the temporary conversion of 401(k) accounts into annuities, which can be continued permanently if the individual desires. While that doesn’t seem to be on the horizon yet, you can still do it yourself and take all or part of your 401(k) and invest it in an annuity. However, they may have higher costs and lower growth rates than other investments, making them less than ideal for many younger investors far away from retirement. If you’re soon to be or already retired, though, a 401(k) rollover annuity could be for you.