Guaranteed Income Options for DC Plans

A study pinpoints guaranteed lifetime income options offered within defined contribution (DC) plans as an opportunity to address retirement security challenges.

The study report from the Insured Retirement Institute (IRI) indicates workers who convert a portion of their accumulated assets into a guaranteed income stream can effectively manage many of the risks inherent to the DC retirement system, such as longevity risk, volatility and sequence of returns risk, as well as excess withdrawal risk.  

IRI research shows Baby Boomers value guarantees, and the value of those guarantees increases with age.  Among Boomers ages 60 to 66, 19% stated the most important trait of a retirement product is guaranteed income each month, as do more than 15% of Boomers ages 55 to 59 and 14% of Boomers ages 50 to 54. Research from IRI and Cogent Research shows annuity owners are increasingly more likely to agree that annuities are a critical part of a retirement strategy, increasing by 18 percentage points from 55% in 2011 to 73% in 2012.  

Using its own research, supplemented with other retirement industry research, the IRI study report discusses the advantages and challenges of in-plan guaranteed options.  

The report, “Guaranteed Lifetime Income Options within Employment-Based Plans,” is here.