The Real Value of Annuities for the Mass Affluent Is based on a study by Morningstar which concludes ”retirees with a greater base of guaranteed income or a lifetime withdrawal benefit from a portfolio will optimally spend more each year than a retiree who faces the risk of a sharply lower lifestyle if markets fall…. Retirees gain no benefit in expected lifestyle by bearing the idiosyncratic risk of spending with an unknown lifespan. Annuities improve efficiency by transferring risk to an institution and by transferring this risk can achieve a more secure retirement.
