Dive Brief:
- More than three-quarters of Americans surveyed say they would likely choose guaranteed lifetime income options if their current retirement plans offered them, according to new research.
- The study, "The Ease of Automation and Guaranteed Lifetime Income" from Prudential Retirement, also found that many of those retirement plan participants currently have no choice in the matter.
- Prudential reports about 35,500 defined contribution (DC) plans currently offer guaranteed lifetime income solutions (often combined with auto-enrollment), but that represents only 4% of DC plans.
Dive Insight
According to Sri Reddy, head of Full Service Investments at Prudential Retirement, the survey found 78% of plan participants who said they were familiar with guaranteed lifetime income options believe it’s “very important” to include them in workplace savings plans, and 77% said they would choose such an option. Plus, 80% of plan participants expect to rely on workplace plans as a source of lifetime income more than any other source, including Social Security.
Reddy said American workers want and need retirement solutions that have the potential to offer "pension-like outcomes," and guaranteed lifetime income solutions can meet that need, especially as a default investment option when used in combination with automatic enrollment.
With the old-style pension plan pretty much existing only in the public sector today, employers might want to consider this type of solution for their workforce – at least based on these survey numbers. On the other hand, it looks like there needs to be more education and communications around the guaranteed lifetime income option before that can happen.