From: Chris Weber [mailto:chrisw@community-resourcebank.com] 

Sent: Wednesday, February 24, 2010 12:45 PM 

To: EBSA, E-ORI - EBSA 

Subject: Lifetime Income Comment

I do recognize that people do foolish things with their retirement accounts. Some people take out large sums of money at the 

expense of security in their retirement. Others make foolish mistakes with their investments. On the flip side, most people that have 

full control of their accounts do a good job managing the balances very well and invest commensurate with their risk tolerance.

My worry with a lifetime income annuity option is that it locks people into a payment they can’t ever revoke. Based on personal 

experience as a financial advisor, I can see people getting letters they don’t understand in the mail and waiting until the last minute to 

decide what to do. People don’t spend the time crunching the numbers to really understand how a decision will affect the rest of their 

life. Everyone’s situation is different and life changes over a 20 or 30 year period in retirement. I feel that a lifetime income annuity 

might be as much of a mistake as picking an investment that is too aggressive. 

If someone make the election for lifetime income, how do we handle the following situations: the person who realizes they need to be 

more aggressive because they don’t have enough income to live the way they want to; the frugal retiree who decides they don’t need 

to take as much out of their retirement account to live on; the person whose health starts to fail that decides to spend more 

aggressively in retirement because it will be shorter; the person who decides they want to leave the remainder of their retirement 

account to charity; the person whose income requirement goes up because they become disabled. 

Another huge worry is inflation? If you lock people into a lifetime income, how will inflation be handled? Even at 3%, prices will 

double over 25 years. Most insurance companies currently build in a fixed rate/payment into an annuity, not an open ended variable 

rate/payment. If a company did develop a variable rate, what if you had 70’s style inflation? Being on the hook for a variable rate 

might bankrupt the carrier. If you had certificates of deposit, you could at least get an adjustment on the interest rate. If the 

government backs that up, you are putting the government on the hook for a huge demographic. 

Who picks the insurer? Who ensures that the insurer is well rated and competitive? What happens when the carrier falls into 

financial trouble? Is the government again going to pick up the tab if it is a systemic issue across the industry? 

I do have a different solution to the withdrawal problem. Don’t allow any withdrawals before age 591⁄2 for any type of retirement plan 

or account, including IRA’s. The only exception would be if the person has retired early and committed to a 72(t) distribution. Also, 

limit the amount the amount that can be withdrawn from an IRA in any given year to 10% of the account balance. That percentage

could be indexed, too ... say 5% for a 60 year old and 15% for an 85 year old. 

On the investment side, you could limit the types of investments. No initial stock purchases of stocks under $2 dollars or bonds that 

are below investment grade and no private issues. Foreign securities must have similar limitations. No use of leverage and very 

limited use of derivatives for hedging. Underlying mutual funds must also adhere to those rules. 

I also see a regulatory hole with product providers. Maybe mutual fund companies, insurance companies, custodians/trustees, and 

all brokers/advisors/agents should be held to a fiduciary standard? Mutual fund and insurance companies market their products, but 

take not responsibility for who purchases them. 

The big problem is ultimately education. We must educate the public on the merits and risks of different investments as well as how 

their income needs will change over their lifetime. Maybe a DOL brochure could be included with distribution paperwork? 

Ultimately, I think it would be a big mistake to take away choice or lead retirees in certain directions, whether conservative or 

aggressive. 

Chris Weber 

Community Resource Bank (PrimeVest Financial Services) 

Northfield, MN 

507-645-1841 

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