Interest in Guaranteed Income

Three in 10 employees with a defined contribution (DC) plan intend to roll at least some of their assets into an individual retirement account (IRA) when they retire—less than the 44% of retirees who have actually done so, according to the Employee Benefit Research Institute (EBRI)’s 28th annual Retirement Confidence Survey (RCS).

One in four intend to leave at least some money in their DC plan, but two in 10 say they will use plan assets to purchase a product that provides guaranteed lifetime income—far more than the 7% of retirees who have done this. Eight in 10 DC plan participants are very or somewhat interested in an in-plan investment option that would guarantee monthly income for life in retirement, and the same number express interest in taking money out of their plan at retirement and moving it to a financial product that would guarantee them monthly income.

Employees with a DC plan also express interest in longevity insurance—guaranteed income products that pay out once a specified age (80 or 85) is reached. Nearly half (48%) report being very or somewhat interested in these products, compared with fewer than two in 10 retirees.

This interest in guaranteed income products may be related to employees’ confidence level. The RCS found that the share of workers who feel very confident in their ability to live comfortably in retirement remains low, at just 17%. Forty-seven percent are somewhat confident.

Only half of employees are confident they know how much income they will need each month in retirement or how to withdraw income from their savings