People without a pension who want to set up something that will pay them set amounts of money when they’re in retirement often turn to annuities. But Paul Sullivan writes this week in his Wealth Matters column about a decision by Prudential Annuities to suspend the ability of some policyholders to make further contributions. And annuity experts told Paul that they expect other insurers to take similar steps because they made promises before the financial crisis that they are now unable to keep.

The money the affected Prudential policyholders have already contributed to their annuities is safe, but people who thought they could continue adding to their accounts will now see smaller payments than they had thought they would.

Retirement income is an issue that’s going to come up repeatedly, as companies stop offering pensions and workers have to come up with their own plans. Those unable to put aside money may end up without much income beyond Social Security in their old age, a subject Paul wrote about for the special Retirement section this week. He found that millions of people are in that situation.

How do you plan on paying your expenses when you retire? Are you planning on buying an annuity to get regular checks to supplement your Social Security? Do you have a 401(k)? Or are you one of the lucky people who expects to get a pension?

Article source: http://bucks.blogs.nytimes.com/2012/09/14/a-reminder-of-the-perils-of-retirement-planning/?partner=rss&emc=rss