Employers are becoming more concerned about employees’ access to income during their retirement and are questioning whether target-date funds, the default investment option for the majority of 401(k) plans, do a good job of providing such income, according to a recent survey by TIAA.
The survey shows that 75% of employers responding said target-date funds do extremely well or very well when it comes to helping workers save for retirement, down from 87% in a previous survey in 2020. Just 66% say TDFs do extremely well or very well when it comes to helping plan participants deal with their income needs during retirement, down from 78% in 2020.
In response to a question about their plan’s features, 38% of employers said the biggest feature their plan lacks is access to guaranteed lifetime income.
Currently, just 34% of the employers surveyed offer a guaranteed lifetime income option in their retirement plan.
Providers have begun to roll out TDFs that offer lifetime income. Seventy-two percent of the employers surveyed by TIAA said they’d be interested in a TDF that allocated to a guaranteed lifetime income solution as participants near retirement.
[More: Annuities are heading to 401(k)s]
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