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Successful Defined Contribution Investment Design by Ying Gao, Stacy L. Schaus

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CHAPTER 10Retirement Income: Considering Options for Plan Sponsors and Retirees

I advise you to go on living solely to enrage those who are paying your annuities. It is the only pleasure I have left.

—Voltaire

In April 2007, I had the pleasure of interviewing, for PIMCO’s DC Dialogue, a friend and former fellow board member at the Financial Planning Association: Susan Bradley, CFP. Susan is a nationally recognized financial planner, esteemed author, and founder of the Sudden Money Institute, which is dedicated to working with individuals to address the emotional and financial impacts of receiving “sudden money.” Now, when we think about the idea of sudden money, what normally comes to mind are events such as winning a lottery or receiving a large inheritance—but for most Americans, receiving their retirement savings, such as funds in a defined contribution pension plan, is about as close to lottery winnings or an inheritance as they’ll ever get. Yet sudden money in all its forms—from unexpected windfalls to carefully saved retirement accounts—changes lives and adapting to this change requires transition.

In this book thus far, we have focused on how plan sponsors and participants can work to ensure the best outcomes from their DC plans, from the point of view of ensuring those plans are sufficiently funded and designed to provide the retirement income plan that participants will need. But what happens to participants, plan sponsors, and plans at the point of retirement? Should ...

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