Holding on to the hoarding mentality
After decades of saving and investing, turning that large account balance into a stream of income may hurt a little.
"I would at this point like to mention the A-word. That is the life annuity," Webb says. Very basically, immediate annuities are insurance against outliving your money. You give the insurance company a lump sum, and they agree to give you a certain amount every year until you die.
"People view it as a risky gamble that they will lose if they die young," says Webb.
"The other thing is that people have trouble going from piles to flows. If I tell you that a lump sum of $1 million is going to give you an income of only $40,000 per year, your reaction is, surely that can't be right," he says.
The alternatives to annuities -- living off of interest and dividends or using the 4 percent rule for withdrawals -- can leave retirees subject to market whims or pursuing investment strategies based on their need for income instead of a prudent approach that optimally balances risk and reward.