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Get Payouts Straight From Your 401k

Written by Carrie T. Ratzlaff    Tuesday, 20 December 2011

FINANCIAL ENGINES, AN INVESTMENT ADVISER THAT MANAGES 401(k) accounts, recently introduced the first retirement-income strategy designed specifically for 401(k) plans. It combines a professionally managed retirement-income account with an optional annuity to provide guaranteed lifetime income later in retirement. Five years before you retire, Financial Engines will gradually reallocate your 401(k) portfolio into a bond-heavy mix that will reduce the risk of large stock market losses just before retirement. Then, when you're ready to start receiving payouts, it will manage the portfolio to create steady, reliable (but not guaranteed) income. The strategy involves investing the bulk of the portfolio in a bond ladder to create an income floor and allocating about 20% of the assets to stock funds to create growth potential. A small portion of the portfolio (about 15% of the assets) is set aside and invested in bond funds; that money may be converted to a lifetime annuity anytime up until age 85. The feature, known as Income+, is available at no additional cost to participants in Financial Engines' managed-account program. So far, Aon Hewitt, ACS, ING, J.P. Morgan Retirement Plan Services and Mercer have agreed to offer the new program to their clients this year.

Last Updated ( Tuesday, 20 December 2011 )