For years, retirement plan providers, money managers and policy makers have been contemplating solutions to an inevitable problem for an aging society: How can retirees be assured a lifetime of saving can be accurately managed and spent to last a retirement that will span two decades or more?

With baby boomers retiring in droves, the retirement income meme is arguably as central to policy discussions as savings strategies.

Now, the issue appears to be trickling down to employers and savers in workplace retirement plans.

BlackRock's 2019 DC Pulse Survey of 228 plan sponsors revealed nearly unanimous agreement that including income-generating products in retirement plans is central to supporting workers' quest for a secure retirement.

Sponsors are addressing the retirement income question in record numbers. According to this year's survey, nearly seven in 10 plans include some form of retirement income tool, compared to just half of plans in 2018. Another 22 percent of plans say there will implement income tools in the future.

About 80 percent of sponsors tell BlackRock their employees would benefit from target-date funds that generate guaranteed retirement income. BlackRock's LifePath TDF series, which held $209 billion in assets at the end of 2018 across all vintages, includes a retirement fund that purports to manage investment and longevity risk after investors leave the workforce.

BlackRock's survey shows sponsors are looking to their TDFs to address retirement income. In 2019, 78 percent said their TDFs include a decumulation strategy, compared to 57 percent in 2018.

And three-quarters said they consider decumulation capabilities when choosing a TDF, compared to 58 percent in 2018.

Participants too are keying on retirement income strategies. Eight in 10 report wanting employers to provide income options in retirement plans, and 90 percent said a savings fund that automatically converts savings into a guaranteed retirement income stream was “appealing.”

The vast majority of participants—80 percent—said income generation is a top consideration when choosing an investment, and 65 percent said they would save more if offered an investment with a retirement income option.

Fear is motivating participants' awareness of retirement income features. Two-thirds find the prospect of generating their own income from retirement savings worrisome, up notably from 2018.

The good news from BlackRock's survey is that sponsors show an overwhelming willingness to evolve 401(k) menus with the growing imperative on retirement income. More than 90 percent of employers said they bear responsibility for their employees' retirement preparedness.

Of the more than 1,000 participants surveyed by BlackRock, many appear to be on a productive saving path, particularly among younger workers. The average retirement savings in the age 20 to 30 cohort was over $80,000, and more than $143,00 for those between 31 to 40. Savers over age 61 report an average of $341,400 in savings.

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'Retirement income' meme taking hold with sponsors, savers

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