Who benefits from guaranteed lifetime income - and how?

22%. That is the average increase in potential retirement spending that individual savers in defined contribution plans can achieve when they embed guaranteed retirement income solutions into a target date fund. For lower-income workers, it’s a 25% increase.¹

These are just two findings from our persona analysis in “A nest egg safety net,” which examines who benefits from guaranteed lifetime income.

For this paper, we compared a traditional retirement pension benefit with a guaranteed lifetime income benefit within a target date strategy to find out if, like a pension, a lifetime income benefit can provide a predictable income stream in retirement.

An equally important question is – how can having guaranteed income enhance the retirement experience of different segments of an employee population? Does it benefit everyone? What about those at the top or bottom of the income spectrum? Are the benefits strictly financial, or are there behavioral advantages, too? These questions are usually at the top of plan sponsors’ minds. And, with over a decade of experience working on the decumulation problem, it’s something we’ve given considerable thought.

In the analysis, we expand on work we’ve done with individual companies' employee populations, as well as industry stakeholders,² to examine who benefits from guaranteed lifetime income across a nationally representative sample of workers. We unpack our key findings as we work to answer the question, “Who benefits from guaranteed lifetime income?”

Our in-depth analysis aims to show that, not only is the need for retirement income universal – the impact it can have is, too.