Prior to adoption of Social Security in the U.S., many individuals and couples were dependent upon their families and their own personal savings to support themselves in retirement. Post WWII, family support was mostly replaced by the three-legged stool concept of retirement funding, consisting of Social Security benefits, employer-sponsored defined benefit pension benefits and personal savings. Over the last thirty years, however, with the advent of 401(k) type defined contribution (DC) plans, declining interest rates and longer lifespans, many defined benefit plans have been terminated by plan sponsors and replaced by DC plans. Generally, benefits payable from today’s DC plans are lump sum distributions (that may be rolled over to individual retirement accounts), with relatively few DC plans today offering lifetime income distribution options.
