Solving five key retirement income concerns for plan sponsors

Plato said it best

Necessity is the mother of invention. More than 11,000 Americans are turning 65 every day.¹ Yet what was once a significant source of guaranteed retirement income for many in previous generations – the pension – has largely slipped away. We believe helping workers feel financially secure in retirement is a necessity.

Our solution aims to provide plan participants with the option to access guaranteed income in retirement. Launched in the spring of 2024, it’s called LifePath Paycheck™ and it’s something our strategists dedicated years to fine-tuning, because we knew it was something not only workers wanted but plan sponsors, too. In our most recent Read on Retirement® survey, 60% of workplace savers said they worry about outliving their savings, and 99% said retirement income would help. Similarly, 99% of plan sponsors said they feel responsible for providing guaranteed income.

Yet, just 11% of plan sponsors have implemented a solution to do just that. We wanted to understand the barriers. So, we commissioned a study by Greenwald Research to ask 300 defined contribution decision makers about their biggest concerns and laid out how we’re addressing them.

A retirement income renaissance

There’s a belief that income solutions are still in early days. 79% of plan sponsors believe this in some capacity. 70% are waiting for income solutions to reach a growth phase or mainstream before they adopt.

Retirement income solutions aren’t a particularly new concept. In fact, LifePath Paycheck is the result of more than a decade of work and experience. We believe the idea is in the spotlight now because of the seismic shift in workers’ access to pensions, coupled with growing uncertainty about the future sustainability of Social Security.

There is one way we see this as just the beginning: 4 in 10 plan sponsors have heard of retirement income but haven’t seriously discussed these options. Similarly, 16% say they have a retirement income solution, but they likely mean they offer a form of systematic withdrawal or a retirement vintage of a target date fund.

We see this as an opportunity for a retirement income renaissance, re-introducing plan sponsors to a concept that’s ready for prime time. Between the 5% of plan sponsors who actively decided to not implement a retirement income solution and the 11% who have implemented, there are a significant number who have questions – and concerns. The good news is, we’ve already started to innovate to help break down those barriers – just keep reading.