Retirement Income Solutions: Empowering Employees with Lifetime Income in Retirement Plans

93% of all workers believe that it is important for their retirement plan to provide lifetime retirement income solutions.[1]

The retirement landscape and the expectations of today’s workforce are rapidly evolving. As employees seek greater financial security in retirement, employers and plan sponsors are increasingly exploring innovative solutions to help participants turn their savings into reliable, lifelong income. One of the most promising developments in this space is the integration of retirement income solutions—such as target date funds with annuity components—directly within employer-sponsored retirement plans. With the greater need for income replacement in retirement, it’s important to understand the benefits and marketplace trends of these solutions and why now is the ideal time for plan sponsors to take action.[2]

Market Trends: The Rise of Lifetime Income Products

Traditionally, defined contribution plans like 401(k)s have focused on helping employees accumulate assets. However, as the first generation of 401(k) savers enters retirement, the conversation is shifting from “How much can I save?” to “How can I make my savings last?” In response, the retirement industry has seen a surge in lifetime income products— investment options designed to provide retirees with a steady, predictable income stream throughout retirement.

A notable trend is the emergence of target date funds (TDFs) with embedded annuity features. These hybrid products combine the simplicity and automatic diversification of TDFs with the security of guaranteed income, making them an attractive option for both plan sponsors and participants.

Benefits of Guaranteed Monthly Income

Car insurance, Netflix bills, groceries, credit card bills, etc. are all expenses that are generally paid monthly. Americans today have grown accustomed to a monthly cadence. Therefore, by converting a portion of retirement savings into guaranteed monthly payments, retirees can better manage longevity risk—the possibility of outliving their assets. This predictable income stream helps cover essential expenses, reduces anxiety about market volatility, and allows retirees to enjoy their post-career years with greater confidence.
Offering these solutions can enhance the overall value of employers' retirement plans, improve employee satisfaction, and support workforce planning by enabling smoother transitions into retirement.

Who Can Benefit?

One of the unique strengths of in-plan retirement income solutions is their broad applicability. While high-income earners may have access to personal financial advisors and private annuities, employees across all income levels can benefit from the convenience and institutional pricing of solutions offered within their workplace plan. For lower- and middle-income workers, these products can be especially valuable, providing access to guaranteed income options that might otherwise be out of reach.

Why Now Is the Time to Act

The vast majority of employees believe that their employers have a responsibility to help their employees achieve adequate income throughout retirement.[3] With demographic shifts in the workforce, regulatory support from SECURE 2.0, and growing employee demand, there has never been a better time for plan sponsors to consider adding retirement income solutions to their suite of offerings. Early adopters may see improved participant engagement and enhanced retirement readiness.

Takeaways for Plan Sponsors

Retirement income solutions represent a significant step forward in helping employees achieve financial security in retirement. By proactively evaluating and implementing these options, plan sponsors can:

1. Differentiate their benefits package to help attract top talent
2. Support employees at all income levels with accessible, guaranteed income solutions in retirement
3. Align with legislative trends and best practices in retirement plan design

Next Steps

Plan sponsors interested in enhancing their retirement plan offerings with lifetime income solutions should begin by thoroughly reviewing their current plan lineup to assess whether such options are already available or could be integrated. Engaging with your plan advisor is essential to ensure any new solution aligns with the organization’s goals and participant needs. Additionally, sponsors should prioritize educating employees about the value of guaranteed income and how these solutions can fit into their broader retirement strategies, helping participants make informed decisions. Finally, continue to stay informed about evolving legislation and industry best practices to remain compliant and competitive.

If you’d like a tailored consultation or more information on integrating retirement income solutions into your plan, reach out to your retirement plan advisor today!

Want to read more about retirment plan solutions for your employess? Check out our blog post, "What Every Plan Sponsor Should Know About Having a Customized Financial Wellness Solution."

Investment advice offered through OneDigital Investment Advisors LLC. Insurance products are available through OneDigital Insurance LLC., an affiliate of OneDigital Investment Advisors LLC. (“ODIA”) Benefits from annuities are subject to the claims paying ability of the insurer issuing the policy.

Sources:

[1]Nuveen, “Workers Overwhelmingly Call on Employers to Offer Lifetime Income in 401(k) Plans”

[2]JP Morgan, “Navigating the retirement income challenge”

[3]Nuveen, “Retirement savings to retirement income”

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