Q: We know that emotion plays a role in money, and therefore retirement. What are some ways we can help employees offset less-than-rational emotion and thus make better decisions about their retirements?
A: Behavioral economics have been the subject of much benefits of beginning payments at (or after) full retirement age. Second, consider including education about annuities in your pre-retirement sessions. These can help overcome fears about running out of money. Such fear may lead people to underspend in the early years of their retirement; PIMCO claims that 18 years into retirement many people have spent only 20% of their nest egg. For retirees who remain uncomfortable with annuities, PIMCO recommends education about how a conservative asset allocation may be used to provide some relative stability and hedge against longevity risk. Read the article for more useful information.
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