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I love the idea of maxing out your 401(k) until retirement because old school pensions are hard to come by. But turning your 401(k) into an annuity at retirement is a fool’s errand.
You’re faced with nosebleed inducing fees and limited access to your money while the insurance companies bank on your early demise. Not exactly a healthy relationship.
It’s concerning that BlackRock, the world’s largest money manager, is pushing for 401(k) annuities to grow its assets at the price of those who cannot afford to lose them and deserve better.
Dawn Lim reports on the troubling development at The Wall Street Journal:
BlackRock Inc. BLK 0.57% is planning for a future in which annuities could come to more Americans’ 401(k)s.
Congress is debating a bill that would encourage more companies to offer retirement savings plans with annuities as part of sweeping changes. Last month, the House passed a version of the bill, and now the Senate is considering legislation.
The world’s largest money manager lobbied for at least three years on key aspects of the bill, the Setting Every Community Up for Retirement Enhancement Act. The effort is part of a series of attempts over the past decade by the firm to advocate for changes in the retirement system.
BlackRock, with $6.5 trillion in assets under management, is building products for workplace-savings plans that incorporate instruments to help participants convert balances into steady, lifetime income.
While BlackRock isn’t currently in the annuity business, the firm is now in talks with insurers to provide such instruments as a part of retirement offerings it wants to launch. The firm joins financial companies from State Street Corp. to TIAA that are competing to reshape 401(k)-type plans.
Read more here.
Originally posted on Your Survival Guy.
