Prudential Paper Calls for Automatic Lifetime Income in Retirement Plans

Adding automatic-enrollment and automatic contribution escalation to defined contribution made it easier for workers to save for retirement. But a new white paper from Prudential Financial states that retirees still need help turning those savings into income in retirement.

In the paper, “Automatic Lifetime Income: The Missing Outcome in Today’s Retirement Plans,” Prudential recommends DC plan sponsors make lifetime income an automatic plan feature, directing a portion of participants’ long-term savings into an annuity that provides guaranteed income for life. Participants would retain the option to opt out.

The paper’s proposal builds on the success of automatic features as participants are saving for retirement. Most new DC plans are now required to include automatic enrollment and auto-escalation, while qualified default investment alternatives, such as target-date funds, have helped simplify investment decisions. Together the features have helped increase participation and savings. According to Vanguard’s How America Saves 2026 report, 61% of the DC plans for which is it the recordkeeper used automatic enrollment in 2025, compared with 10% in 2006. Participation was 94% in plans with automatic enrollment, versus 64% in plans with voluntary enrollment.

Some DC plans already offer lifetime income through default investments, such as target-date funds that include annuities. But participants typically must take an additional step at retirement to activate the income payments. Prudential argues that making those payments automatic would ensure people begin retirement with a guaranteed income stream in place, without having to act themselves.

“Savings are only part of the equation. Retirees also need a strategy for turning those savings into income they can confidently spend,” said David Blanchett, head of retirement research at Prudential and a portfolio manager at PGIM, in a statement. Blanchett, who co-authored the white paper with Phil Waldeck, head of U.S. businesses at Prudential Financial, continued, “Just as automatic features have helped transform how Americans save for retirement, making lifetime income automatic could help transform how they spend in retirement, giving people more confidence to enjoy the savings they’ve worked so hard to build.”

Interest in Income

Plan sponsors also appear open to setting aside a portion of participants’ savings for lifetime income. In a July 2025 survey of 157 DC plan sponsors conducted with the Retirement Research Center, an organization of the Defined Contribution Institutional Investment Association, 68% said a reasonable maximum allocation to automatic lifetime income at retirement would be between 10% and 50% of a participant’s total DC savings.

Benefits for Retirees

In one modeled example, allocating 20% of a retiree’s savings to increased annual income in retirement to $47,690 from $41,469, with roughly 30% of the total guaranteed for life, excluding Social Security. The approach could provide a reliable income base while leaving the rest of a retiree’s savings available for other expenses and investment decisions.

The need for this kind of decision support is underscored by the difficulty many Americans have planning withdrawals, according to the authors. In Prudential’s survey, just 16% of respondents age 50 and older said they had a clearly defined withdrawal strategy for assets in retirement, and only 28% worked with a dedicated financial adviser on either a regular or as-needed basis.

Prudential’s paper also points to research showing that financial decision-making abilities can decline with age, even among people who remain cognitively healthy. With retirement potentially lasting 20 to 30 years, expecting individuals to manage withdrawals and investment decisions on their own over that time period could become increasingly challenging.

Making lifetime income a default also could expand access to guaranteed income for workers who have limited access to financial advice or might not seek out annuity products on their own.

Policy and Regulation

The issue received attention at a January 2026 House subcommittee hearing on modernizing retirement policy, where witnesses discussed ways to expand lifetime income options in workplace plans.

Prudential also points to a September 2025 Department of Labor advisory opinion that determined that AllianceBernstein’s Lifetime Income Strategy could qualify as a QDIA. The strategy, as described, met QDIA requirements, although plan fiduciaries must still meet their responsibilities when selecting and monitoring investment options.

Building on 2019’s Setting Every Community Up for Retirement Enhancement Act’s existing safe harbor for selecting annuity providers, Prudential’s paper recommends that policymakers expand protections to explicitly cover automatic lifetime income solutions included in QDIAs. The company also recommends allowing participants a period of time in which they could reverse their automatic income election and regain access to their savings. These changes, Prudential argues, could give plan sponsors greater confidence in adopting lifetime income options.