Five Considerations for Adding Lifetime Income Options to Retirement Plans

Our advisor, Gina Buchholz, presents this 20-minute webinar for retirement plan sponsors about Lifetime Income Options. We created this presentation to help retirement plan sponsors assess their potential need for a lifetime income product in their retirement benefit to help their employees aka participants.

Agenda:

  1. Five Considerations for Adding Lifetime Income Options to Retirement Plans

  2. Future Trends

  3. Questions Every Committee Should Consider

What is a Lifetime Income Option in a Retirement Plan?

A lifetime income option is a retirement plan feature designed to turn a portion of a participant’s retirement savings into a predictable stream of income that can last for life.

Instead of relying solely on withdrawals from an investment account, participants may have the option to use some or all of their account balance to create guaranteed or income-oriented payments during retirement.

Five Considerations for Retirement Plan Sponsors Thinking About Adding Lifetime Income Options

  1. Is There a Participant Need?

  2. Understand the Different Types of Lifetime Income Solutions

  3. Fiduciary Responsibilities 

  4. Participant Experience

  5. Implementation and Plan Design

Questions fiduciaries should consider asking related to Participant Need:

  • Are employees nearing retirement?

  • Are participants asking for income planning?

  • Are employees concerned about outliving savings?

  • Would this improve retirement outcomes?


Understanding the Different Types of Lifetime Income Solutions

  1. Guaranteed Products

  2. Non-guaranteed income

  3. Embedded solutions

Fiduciary Responsibilities

This includes provider selection, due diligence, financial strength, product structure, fees, and much more.

Remember: The SECURE Act may have created a more confident road — not a free pass.

Participant Experience

Remember: Income illustrations alone do not create retirement confidence. Education is critical.

Common Questions that Participants Ask:

  • Can I get my money back?

  • What happens if I die early?

  • Can I leave my employer?

  • Can I change my mind?

  • What does this cost?

Implementation and Plan Design

Remember: Adding lifetime income is not simply checking a box.

Committee Considerations include Recordkeeper capabilities, Payroll integration, Distribution options, Portability, Investment menu impact, Target date integration, Default or optional?, and How will success be measured?

Future Trends

  • SECURE Act encouragement

  • SECURE 2.0

  • Income illustrations on participant statements

  • Target date funds evolving

  • Private market investments entering Defined Contribution (DC) plans

  • AI-driven retirement income planning

  • Managed accounts becoming more sophisticated

  • Growing demand from retiring Baby Boomers

Questions Every Committee Should Consider:

  • Why are we considering this?

  • Which participants benefit?

  • Is guaranteed income necessary?

  • How much liquidity should participants retain?

  • How will we educate employees?

  • How will we monitor this solution over time?

  • Does this improve retirement outcomes?

Key Takeaway

The question is not whether lifetime income belongs in every retirement plan. The question is whether retirement committees have thoughtfully evaluated whether it belongs in theirs.

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