(MarketWatch) Recently, I wrote about how retirees can use their Social Security benefits and required minimum distributions (RMDs) from their individual retirement accounts and 401(k) plans as substitutes for defined-benefit pensions that, at least in the private sector, may soon be as extinct as the woolly mammoth or Tasmanian tiger.
But they may not be enough. Social Security was designed to replace only 40% of preretirement income. And RMDs may fall short of your needs if you don’t have enough saved or the market tanks and you find yourself taking a smaller piece of a shrinking pie.
That’s where annuities can help you build your own pension plan. They often get a bad rap for high fees, surrender charges, and complexity, but certain kinds of annuities can give you steady, pension-like income or insure against your running out of money if you wind up living longer than you expect.
