Retiring with Dignity: A Right Worth Fighting For

Kourtney Gibson

Every American should be able to stop working at a reasonable age and know that they can thrive, not just survive. After decades of work, we must be able to sit down and enjoy the fruits of our labor. Retiring with dignity is not a luxury; it is a cornerstone of a just society and should be an achievable goal for every hardworking American.

A Pivotal Moment in Retirement History

A half a century ago, millions of American workers had some access to pension plans and the stream of lifetime retirement income they provided. Today, that safety net is all but gone. An entire generation is facing retirement without the security that many of their parents once took for granted.

TIAA and our asset manager, Nuveen, developed a simple solution: target-date strategies that embed lifetime income annuities.

During one’s working years, annuity investment benefits from guaranteed returns during the accumulation phase. Then, upon retirement, there is a built-in option to convert a portion of savings into lifetime income at institutional pricing, transforming uncertainty into security.

There’s no question about it: Annuity-embedded target-date solutions will revolutionize the retirement landscape like nothing we’ve seen in decades. Thanks to recent legislation included in the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022, as well as the accelerating demand for guaranteed lifetime income benefits, these solutions will help bring back the promise of greater retirement security that defined previous generations.

The Revolution Has Begun

As of February, 1,000 employers across the corporate, education, government and health care sectors have adopted TIAA and Nuveen’s lifetime income target-date solutions. This milestone signals a shift: Employers across a spectrum of industries are recognizing that guaranteed lifetime income is an essential worker benefit and know that a target-date structure is an accessible and lower-cost way to provide employees with guaranteed lifetime income benefits in retirement.

In fact, nearly 3% of the target-date market—more than $140 billion—has already embraced annuity-embedded target-date solutions, according to a report by Sway Research LLC. That kind of growth in just a few years is nothing short of remarkable. But this is just the beginning. We believe that within the next decade, up to half of the market could adopt these solutions.

Why is that? Because the existing retirement savings framework simply was not designed to solve the retirement income challenge. Americans have worked hard, saving diligently through their retirement plans, yet when it’s time to retire, the daunting question remains: How do you make your retirement savings last for, potentially, 30 years or longer?

This is why TIAA is forming agreements with others in the retirement industry that no one thought were possible a few years ago, including a recent collaboration with one of the world’s leading asset managers: to co-develop additional annuity target-date solutions that will be available to millions more Americans.

We’re standing at the dawn of a truly transformative era.

Imagine having the power to convert a part of your retirement savings into an income stream that lasts as long as you live. Envision the peace of mind that could come from knowing that regardless of life’s twists and turns, or what the markets may bring, you can count on a monthly check arriving like clockwork.

A Call to Action

We’re not finished yet. Every part of our retirement ecosystem must step up:

• Policymakers must move quickly to pass guidance and legislation that makes it easier for workers to convert their savings into lifetime income when they retire. They should continue to support state and federal policies to expand automatic enrollment, auto-escalation and auto-reenrollment so that every worker can confidently build a more secure future;
• Recordkeepers need to streamline the way in-plan lifetime income solutions are delivered, making it easier for those in charge to offer these essential products;
• Consultants should lead the charge in designing retirement plans that include guaranteed income. This is not simply a nice-to-have—it’s an absolute must; and
• Finally, plan sponsors need to invest in enhancing retirement benefits, because plan participants deserve nothing less than the security of true, guaranteed income.

Together, we are not just managing retirement savings; we are restoring retirement security and bringing back that steady check for life that once defined the American retirement dream. This isn’t incremental improvement; it’s a fundamental transformation.

Kourtney Gibson is the CEO of TIAA Retirement Solutions.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.