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Lifetime Income Illustrations: A Wake-up Call

Sep 13, 2021

Key Takeaways

  • Plan sponsors are required to annually provide a projection of lifetime income.
  • The illustrations will help defined contribution plan participants focus on income.
  • Survey results indicate participants will be prompted to seek assistance.


With the passage of the SECURE Act in late 2019, Congress sent a message that defined contribution (DC) retirement savings plans must do a better job of helping workers generate income throughout their retirement years. As a result, participants in 401(k) and other DC plans will soon start seeing a new number on their statements at least once per year: the amount of lifetime income their balance is expected to generate in retirement1. This number is likely to be a wake-up call for many, and it may prompt questions about how they will get to be where they want to be at their retirement.

In a new paper, Lifetime Income Illustrations: Preparing for Participant Reactions Opens in new window, we take a deeper dive into lifetime income illustrations, how they must be calculated, and share examples of how they might make retirement plan participants more aware of their income challenges and opportunities. We also share the results of a new survey showing how participants – both early savers Opens in new window and pre-retirees Opens in new window – might react to their lifetime income projections.



Chart showing how likely or unlikely participants would be to take action with respect to their retirement plan in this scenario. 79% were somewhat + extremely likely (comprised of 46% extremely likely and 33% somewhat likely); 14% were somewhat + extremely unlikely, and 7% were not sure.



Lifetime income disclosures are a great first step, but workers are going to need more assistance in generating and protecting their lifetime income. DC plans such as 401(k)s must evolve from being just savings plans to becoming true retirement plans. Plan sponsors and providers have a unique opportunity to play a stronger role in improving outcomes.



1 While some DC recordkeepers may have provided a projection in the past, this new projection will likely be different based on new Department of Labor rules.


For Compliance Use Only: 1051737-00001-00

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