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A New Option for the Retirement Crowd
CNBC.com | March 16, 2012 | 02:18 PM EDT

As a growing number of Americans worry about outliving their retirement savings, the government is encouraging employers to offer an old-school, pension-style option for 401(k) holders.

The proposed revamp of retirement fund rules would make it easier for workers to convert part of their 401(k) savings into an annuity that would pay guaranteed income checks for life — no matter the ups and downs in the markets.

And in keeping with the new assumptions about retirement, there is an unconventional component; a “longevity option” would let 401(k) savers take a lump sum portion at retirement age and defer it for 20 years, so retirees would start getting steady checks in the mail at age 85 and beyond.

Investment advisers say that’s a big improvement on the “all-or-nothing” choice of many current plans, which allow retirees to take their entire 401(k) as a lump sum in cash or convert the whole thing into an annuity, instead of a combination of options.

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