Nearing retirement and wondering how you can possibly manage your retirement portfolio yourself? I'm talking about the funds you'll be rolling out of your 401K, 403B or other employer-based retirement savings program. Many people are asking that question as they look at those large chunks of money and want to be sure they don't outlive their money during retirement.
Fidelity and Vanguard want to make that easier and cheaper with an alternative to annuities. Fidelity calls them Income Replacement Funds and Vanguard calls them Managed Payout Funds. Eleven Fidelity funds were launched last week and Vanguard plans to make its version of three funds available by early 2008.
How do these differ from annuities? Annuities are a type of insurance with a guaranteed payout based on a contract. They can be structured with a guaranteed payment for the rest of your life (no matter how long that is) or can be structured with a set payout over a set number of years. The big disadvantages of annuities is that you lose all control of the money inside the annuity and you have to pay significant fees to the insurance company managing it.
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