TDFs with Scheduled Retirement Payouts Up 25% Since 2024

New data reflect the continued growth of products that deliver regularly scheduled payouts in retirement, Sway Research reports.

According to the firm’s “The State of the Target-Date Market: Mid-Year 2025” report, assets in target-date investments with embedded income features totaled $103 billion on June 30, up 25% from $83 billion at the end of 2024.

“[Eighty-five percent] of plan sponsors recognize their employees need more guaranteed income than Social Security alone can provide,” said Tim Pitney, head of lifetime income default solutions at TIAA, in a statement reacting to Sway’s report. “The question isn’t whether lifetime income belongs in 401(k) plans, but how quickly we can make it the standard.”

Of the 16 income-embedded TDF products that Sway tracked, TIAA’s led the pack, measured by assets. The firm’s RetirePlus model portfolio offering, which the company calls target-date-like, held $60 billion at mid-year 2025, up from $50 billion at the end of 2024.

BlackRock’s LifePath, launched in 2024, was the largest income product within a traditional unitized TDF series structure. The product reached $24 billion in assets under management at mid-year, up from $16 billion at the start of the year.

AllianceBernstein managed nearly $13 billion in its custom Lifetime Income Strategy product on June 30.

Assets in U.S. mutual fund and collective investment trust TDFs that Sway tracked rose as well, according to the report—up 10% in the first half of 2025, reaching $4.37 trillion. When the $328 billion in custom target-date strategies Sway tracked is included, the total is $4.7 trillion.

Of the retirement income offerings Sway tracked, 13 were developed via co-manufacturing relationships. Sway stated that “at its core, co-manufacturing is a repackaging of leading TD solutions into exclusive offerings at a lower fee, which is a result of the exclusive provider managing the stable-value sleeve and thus offsetting some of its administrative costs via management fee revenue.”

As of June 30, 46 of the 156 target-date-series products tracked by Sway were developed using a co-manufacturing arrangement.

“Retirement income, co-manufacturing, and (coming soon) access to alternatives, such as private market investments, are reshaping the target date market as innovation meets demand,” said Chris Brown, Sway’s founder, in a statement. “This is fueling opportunities for new entrants and smaller players to gain a foothold in this roughly $5 trillion market.”

Forty-three of the co-manufactured target-date series Sway tracked were CIT-based, spurred by lower costs for CITs than mutual funds and the rise of co-manufacturing, the report stated. CIT-based products held 53% of target-date assets tracked at the midpoint of 2024, compared with 47% in mutual funds. Since year-end 2022, assets in CIT-based TDFs grew 24% annually, compared with 14% for mutual fund-based target-date offerings.

At the end of the first quarter of 2025, the CIT marketplace surpassed more than $5 trillion in assets, according to a UMB Fund Services report. On July 9, Transamerica and TIAA announced a partnership to offer the Nuveen Lifecycle Income CIT Series as a default option for retirement plans recordkept by Transamerica. The product is an example of the industry’s trend toward utilizing income-embedded TDF options that leverage CITs.

Sway’s study of the target-date market is based on a proprietary database of mutual fund and CIT-based target-date portfolio and asset data, which included 156 target-date products with assets, as of year-end 2023, utilizing more than 6,000 mutual fund share classes and CITs.