People work, and plan, and save because they know that life doesn’t stop in retirement. Yet even with the best preparation, many are still at risk of outliving their savings. Longer lives and economic headwinds have made the path to a secure retirement ever more challenging. And people are looking for help answering the question, how do I make my money last?
Introducing LifePath Paycheck™ funds, the next evolution of Target Date solutions. Providing participants with the option to purchase lifetime income from insurance companies selected by BlackRock, complete with an accompanying digital experience.
Like a traditional target date fund, LifePath Paycheck™ becomes more conservative over time, but it doesn’t stop at just stocks and bonds. It starts allocating to a new asset class called “lifetime income” beginning in the year a participant turns age 55 – which, at retirement, can then be used to purchase the annuities from the selected insurers.
That means, in retirement, participants receive a paycheck they can count on every month, every year, for life.
And with the MyLifePath™ digital experience, participants get a clear picture of how today’s contributions can translate to tomorrow’s retirement income, shifting mindsets and encouraging positive savings behaviors to help participants reach their retirement goals.
Managed by BlackRock, LifePath Paycheck™ funds and the MyLifePath™ digital experience.
Driving towards a simpler, more secure path to retirement by providing participants with the option to purchase a lifetime income stream so that you can retire from work, but not a paycheck.
People are living longer – and that should be a great thing. But most workers today can’t count on the kind of guaranteed retirement income that previous generations had. We’re changing that with LifePath Paycheck™, a solution designed to give workers access to income streams they can rely on in retirement – for life.
Choice
When it comes to retirement income, neither plans nor participants want to be “locked in.” There’s no “have to” with LifePath Paycheck − participants can choose to annuitize beginning at 59 ½.1
Simplicity
Complexity can often be a barrier to adoption. LifePath Paycheck is an income solution that’s offered through something familiar - the target date strategy.
Cost efficiency
LifePath Paycheck is designed to be priced in line with institutional-quality target date index solutions and features, all in service of eliminating many of the common fees that accompany traditional insurance solutions in market today.
Introducing LifePath Paycheck™: the next generation of target date solutions that include an option to purchase a lifetime income stream from insurers selected by BlackRock. In other words, participants can get a paycheck for life.
Here’s how it works:
This breaks down as 99% Equity and 1% Fixed Income.
This breaks down as 52% Equity, 9% Inflation, 24% Fixed Income and 15% Lifetime Income.6
Get a paycheck for life by opting to purchase a lifetime income stream for retirement – payable by insurers selected by BlackRock.
The remaining retirement plan savings can either be invested in a target date solution designed to complement the lifetime income stream,7 in another retirement plan investment option, or redeemed for cash.
This breaks down as 37% Equity, 9% Inflation, 24% Fixed Income and 30% Lifetime Income.
For illustrative purposes only and subject to change.
Our most recent Read on Retirement® survey told us workplace savers-and retirees-see value in lifetime income. We wanted to know more about what, exactly, that value was. So, we reached out to the voice of experience: annuity owners. Five key values emerged.
22%. That is the average increase in potential retirement spending that individual savers in defined contribution plan can achieve when they embed guaranteed retirement income solutions into a target date fund. For lower-income workers, it’s a 25% increase.
People are living longer. But for the most part, we’re not choosing to put off retirement. From financial security to mental fitness, here are 6 ways guaranteed lifetime income can benefit workers as they enter that next chapter.
Financial advice often focuses on boosting personal savings rates and maximizing return on investment during a worker’s accumulation years. Equally important, however, is the decumulation process, when people spend those savings in the form of income.
Leveraging BlackRock’s proprietary lifecycle model, our analysis demonstrates how taking a holistic approach to retirement income benefits savers. In particular, a few steps can potentially generate more retirement income and decrease risk.
Check out our latest videos on retirement income – and the impact it can have.
Incorporates a deliberate process to seek outperformance and additional return to help participants generate more return without taking on unnecessary risk.
Invested in a diversified mix of cost-effective, indexed building blocks and built with low cost, efficient index implementations.
1 But no later than mid-December in the calendar year that you will turn age 71 years old
2 BlackRock, Read on Retirement® survey, 2023.
3 BlackRock, Read on Retirement® survey, 2023.
4 BlackRock, When Nest Eggs Need A Safety Net, 2024.
5 BlackRock, Read on Retirement™ survey, 2023.
6 Grows to approximately 30% of the LifePath Paycheck investment at age 65.
7 This solution is a diversified portfolio that has an asset allocation of approximately 50% stocks and 50% bonds, and provides daily liquidity so that participants can make withdrawals whenever they’d like, subject to their retirement plan’s rules.
The LifePath Paycheck™ solution is subject to, among other things plan sponsor adoption and implementation considerations. The LPP solution will initially only be available to U.S. employer-sponsored defined contribution plans qualified under Sections 401(a) and 403(b)(9) of the Internal Revenue Code of 1986, as amended (“IRC”) and may thereafter be available to other investor types, such as governmental plans qualified under Section 457(b) of the IRC, that have each entered into an investment management agreement with BlackRock Institutional Trust Company, N.A.
The opinions expressed herein may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
This material does not constitute a recommendation by BlackRock, or an offer to sell, or a solicitation of any offer to buy or sell any securities, product or service. The information is not intended to provide investment advice. BlackRock does not guarantee the suitability or potential value of any particular investment. This is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be unlawful under securities laws of such jurisdiction. Any distribution, by whatever means, of this information and related material to persons other than those referred to herein is strictly prohibited.
Investing involves risk, including possible loss of principal. Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal. Investment in funds is subject to the risks of the underlying funds. The principal value of the funds is not guaranteed at any time. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s interest, when redeemed, may be worth more or less than the original cost. Any index returns that may be displayed herein are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
The LifePath Paycheck™ funds and MyLifePath® digital platform use patented technology covered by US Patent No. 11,605,131 and 12,056,770.
©2024 BlackRock, Inc. or its affiliates. All rights reserved. BLACKOCK, LIFEPATH, LIFEPATH PAYCHECK, SIMPLY BETTER PREPARED. FOR LIFE., LIFE DOESN’T RETIRE, and MYLIFEPATH are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
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