CGAs: A Surrogate for Fixed Income During RetirementCGAs: A Surrogate for Fixed Income During Retirement

Most of today’s pre-retirees are learning that replacing their employment income isn’t as simple as it was for the generation before them, who benefited from a funded defined-benefit (DB) plan. Those who joined the workforce from 1950 through 1980 were almost all guaranteed some type of DB plan from their employers. DB pension plans peaked in 1985, and within 10 years, the total number of DB plans dropped by 50 percent. Most pre-retirees today don’t have any form of guaranteed lifetime income from a DB plan.¹ Social Security has become the primary source of retirement income for most retirees, including many high-net-worth individuals who rely on it comprehensively.²  

With DB plans becoming extinct, many advisors believed a 4 percent sys...