Congress is considering a new rule and I’m glad they’re doing it.
The rule is to mandate that 401(k) benefit statements display a participant's estimated income stream at retirement based on the account balance.
The goal, according to Investment News is to “Help refocus participants' thinking on income rather than accumulation as saving for retirement falls more on the shoulders of individuals than corporations.”
I think this is a tremendous idea and here’s why.
Too much of investing for retirement planning focuses on the asset accumulation side of the ledger and not nearly enough on de-accumulation - or how much money there is to spend. We routinely think about rates of return but not enough about inflation or taxes or other factors that limit what’s left over when it’s needed the most.
As retirement nears, many pre-retirees get an unpleasant news flash.
That their million dollar tax-deferred account won’t provide for as comfortable a lifestyle in retirement as they had hoped.
I like this and I’ll keep everyone up to date.
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