Amid Recession Fears, Retirement Savers Focus on Lifetime Income Guarantee


  • Demand for annuities is rising as concerns over the economy and the possibility of a recession.
  • More than half of retirement savers are now considering some type of lifetime income security, according to a recent report.
  • Asset managers are rolling out new options to help workers enter retirement with a stable source of income for life.

Amid concerns about the US economy and the possibility of a recession, most retirement savers want some assurance that they won’t outlive the nest egg, according to recent reports.

As a result, the demand for annuities, which offer a guaranteed monthly income similar to social security and pensions, is soaring.

More than half of retirement savers, or 54 percent, are now considering a guaranteed lifetime income, according to a new study by Morning Consult of the American Council of Life Insurance Companies (ACLI).

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“Retirement savers are clearly concerned about inflation and the economy at large,” said Susan Neely, ACLI’s president and CEO.

Passage of the Safety Act also made it easier for employers to offer pensions as part of their retirement savings plan options.

Moving forward, insurance companies, asset managers, and employers are moving to make these guaranteed lifetime income options more widely available through 401(k)s and other defined contribution plans.

Starting this fall, Fidelity will allow plan members to convert a portion of their retirement savings into an immediate income pension, providing pension-like payments after retirement.

Fidelity Investments is the nation’s largest provider of 401(k) plans. This financial services company handles more than 35 million retirement accounts in total.

Asset management giants BlackRock and State Street Global Advisors also announced target-date funds with retirement income options.

“As Americans live longer and healthier, the risk of living longer than they save is creating a ‘quiet crisis’ of financial insecurity in old age,” said Mark McComb, BlackRock’s chief customer officer, in a statement. We are accelerating it,” he said.

It’s good to have pension options when you retire.

carolyn mcclanahan

Founder of Life Planning Partners

“Having options for your pension when you retire is good for people who aren’t confident,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, based in Jacksonville, Florida. talk.

However, be sure to compare the offerings and fees of any annuity, added McClanahan, who is also a member of CNBC’s Advisory Council.

Annuity sales hit a record high in the first quarter of 2023, up about 50% year-on-year, according to insurance industry trade body Limura.

According to Todd Giesing, assistant vice president of pension research at LIMRA, the pension market has benefited from market volatility, concerns about the banking sector and a potential recession, and rising interest rates, which have generally boosted investment returns for insurers. said to improve. .

“Certainly, pension payments are much more attractive now,” said Keri Dorgan, senior vice president of retirement solutions at Fidelity.

Dorgan said he expects interest in pensions to continue to grow “because you get so much more for what you pay”.

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