To reach a different BlackRock site directly, please update your user type.
Spending in retirement is a hard math problem
With Americans living longer and the average retirement age largely unchanged, the challenge of how to spend in retirement is more important than ever.
Guaranteed lifetime income lifts all boats
Our modeling shows that embedded a guaranteed retirement income solution in a target date fund can drive a 22% average increase in potential spending ability across all income levels.
Lifetime income could provide more spending security
We find that, like a pension, a lifetime income benefit within a target date strategy could provide greater income certainty in retirement relative to a traditional target date approach.
22%. That is the average increase in potential retirement spending that individual savers in defined contribution plans can achieve when they embed guaranteed retirement income solutions into a target date fund. For lower-income workers, it’s a 25% increase.1
These are just two findings from our persona analysis in “A nest egg safety net,” which examines who benefits from guaranteed lifetime income.
For this paper, we compared a traditional retirement pension benefit with a guaranteed lifetime income benefit within a target date strategy to find out if, like a pension, a lifetime income benefit can provide a predictable income stream in retirement.
An equally important question is – how can having guaranteed income enhance the retirement experience of different segments of an employee population? Does it benefit everyone? What about those at the top or bottom of the income spectrum? Are the benefits strictly financial, or are there behavioral advantages, too? These questions are usually at the top of plan sponsors’ minds. And, with over a decade of experience working on the decumulation problem, it’s something we’ve given considerable thought.
In the analysis, we expand on work we’ve done with individual companies' employee populations, as well as industry stakeholders,2 to examine who benefits from guaranteed lifetime income across a nationally representative sample of workers. We unpack our key findings as we work to answer the question, “Who benefits from guaranteed lifetime income?”
Our in-depth analysis aims to show that, not only is the need for retirement income universal – the impact it can have is, too.
The passage of SECURE 2.0 brought new in-plan emergency savings solutions. What have the past five years of research taught us about the connection between short-term and long-term financial security? And how can 401(k) plans benefit from lessons learned?
Our report identifies areas where we can convert challenges into opportunity given cracks in the system.
1 BlackRock, A nest egg safety net, 2024
2 BlackRock, Bipartisan Policy Center, Paving the Way to Optimized Retirement Income, 2023.
Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal.
This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the global retirement landscape. The opinions expressed herein are subject to change at any time due to changes in the market, the economic or regulatory environment or for other reasons.
The material does not constitute investment, legal, tax or other advice and is not to be relied on in making an investment or other decision.
Investing involves risk, including possible loss of principal.
2024 BlackRock, Inc or its affiliates. All Rights Reserved. BLACKROCK and READ ON RETIREMENT are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
MKTGH0824U/S-3810521
