Retirement income solutions for the next generation | BlackRock

Larry Fink

This is a revolution. This is a revolution in retirement.

[Title Card]

A paycheck for life coming soon to a 401(k) plan near you

Larry Fink

It was very clear to me…we need to be focusing on helping more and more people understand the journey for financial independence during their retirement.

Anne Ackerley

The number one thing is how big does my nest egg need to be? What does that nest egg – what will it earn in retirement? How much will I be able to spend?

Nick Nefouse

What we’re really trying to find in retirement is this consistent source of income.

Larry Fink

If we could now find a way to recreate a defined benefit plan without encumbering the corporation with a liability and try to provide more certainty as to what does it mean in terms of dollars received. We could change the entire retirement space.

Anne Ackerley

Savers want it. Workers want it. Employers are beginning to think about it, and we are starting to see some employers add a form of guaranteed savings into the 401(k).

Larry Fink

To me, we needed to find something that could provide a tighter range of outcomes… and translate it – not into a lump sum of money – but a monthly payment, like a paycheck.

Nick Nefouse

We’re taking a whole portfolio approach, focusing on the liquid assets, the lifetime income component, and social security. So, we’re going to be able to provide people a better path to understanding what they want their retirement to look like.

Anne Ackerley

What is happening in the 401(k) space is there’s been a lot of innovation and pricing of annuities has come down, you can make them much simpler, and so the concept would be – that within the 401(k) – you’d have the option to choose for some part of your savings to buy an annuity – it might even be embedded in the target date.

Larry Fink

This is revolutionary.

Larry Fink

And I truly believe in 10 years, in 20 years from now, when people wake up, this is going to be the dominant defined contribution structure.

Now available in defined contribution plans

Workers are looking for help answering the question, how much of my nest egg can I spend in retirement… and not run out?

We’ve launched a solution that combines the simplicity of a target date strategy with the increased certainty of an annuity from insurers selected by BlackRock to offer participants a paycheck for life.

Why retirement income?

#1

Because we’re living longer – and that should be a good thing. In the 20th century, the average American lifespan grew by about 30 years.¹

Life expectancy has grown from 47 in 1900 to 79 in 2023.

There are two cakes. One is labelled 47 years with a single flickering candle. It represents the life expectancy in 1900. The other cake is labelled 79 years with three flickering candles. It represents the life expectancy in 2023. Confetti is exploding behind the 2023 cake.

#2

Because outliving savings is a top financial concern - and employers want to help.

60% of workplace savers worry they will outlive their retirement savings;² and 99% of plan sponsors feel responsible to help fix that.³

There are 2 people. One is labelled 60% savers worry. It is 60% filled yellow and has two smaller people behind representing employees. This represents 60% of workplace savers worry they will outlive their retirement savings. The other person is labelled 99% employers feel responsible. It is wearing a tie and is 99% filled yellow. This represents 99% of employers feel responsible to help fix that.

#3

Because having guaranteed retirement income can help retirees’ wallets – and minds.

People can get a 22% average increase in potential retirement spending from a target date strategy with an embedded income solution;⁴ and 93% of workplace savers say having more certainty around retirement income would help their mental health.⁵

For illustrative purposes only.

There is a piggy bank and a heart. The piggy bank is labelled 22% savings increase. It has a coin falling in and is 22% filled pink. It represents that people can get a 22% savings increase in potential retirement spending from a target date strategy. The heart is labelled 93% well-being boost. The heart is 93% filled pink. It represents that 93% of workplace savers say having more certainty around retirement income would help their mental health.

OUR PUBLICATIONS

Insights for better outcomes

LASTEST RESEARCH

When nest eggs need a safety net

Who benefits from guaranteed lifetime income – and how?

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.

Take a look Take a look

Women live longer. Can they afford it?

A look at gender, life expectancy, and the need for retirement income.

Living longer should be a good thing. And it can be with the right tools – for both getting to and through retirement. Women may face different challenges to retirement saving, but there are levers employers can pull to ensure women feel secure in knowing that when work stops, financial security doesn’t have to.

Check it out Check it out

See the moment

Insights from BlackRock’s Read on Retirement

Our survey reveals financial burnout is on the rise, and one to watch. Explore the insights to see what trends are shaping retirement and the role retirement income could play in shoring up confidence.

Take a peek Take a peek

The five forces shaping retirement today

Converting challenges into opportunities

Our recently released report identifies five major trends that are shaping retirement today and the potential for action – so that more Americans can enjoy the secure retirement they deserve after a lifetime of hard work.

View the breakdown View the breakdown

How to optimize retirement income

Joint research with the Bipartisan Policy Center

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.

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Lights, camera, income…

Check out our latest videos on retirement income – and the impact it can have.

BlackRock Bottom Line – Video Script for Anne Ackerley

Title: From saving to spending: navigating a top retirement concern

We know the top financial fear around retirement is outliving savings. Yet most retirees still have 80% of their pre-retirement savings two decades into retirement.* It’s a paradox that reveals the major challenge of spending down your nest egg. To solve it, we need to explore new solutions.

Graphic: - Source: BlackRock/Employee Benefit Research Institute (EBRI), December 2020.

BlackRock Bottom Line open

When most people think about “planning for retirement,” it’s usually “savings” that first comes to mind.

And that makes sense because, from the time we start working, it’s a mindset that’s reinforced for decades until, one day, we retire. And then it’s time to spend. But, it turns out, that’s easier said than done.

59% of investors say it’s difficult to know how their retirement savings will translate into monthly retirement income.

[Graphic: 59% of investors say it’s difficult to know how their retirement savings will translate into monthly retirement income, BlackRock 2021 DC Pulse]

There are lots of reasons for this, but here are the big ones:

People don’t know how long they are going to live, they don’t know what their expenses are going to be and they don’t know what the market will do.

Yet the burden of figuring this out has increasingly fallen on the individual. Consider the shift from defined benefit plans to defined contribution plans like 401(k)s.

Today, the vast majority of Americans cannot fall back on a pension from their employer. And, while there is Social Security, that wasn’t meant to be the primary source of retirement income.

This is a really hard math problem to solve.

But there is good news. The industry is coming together to address these needs and innovate new solutions to provide retirees with secure income options and greater certainty around their future.

Forward-thinking employers who are moving in this direction can benefit from a more financially secure workforce.

The bottom line is, secure retirement income solutions can help create better retirements. With them, more and more people can feel confident and experience greater well-being across their entire journey.

BlackRock Bottom Line – Video Script for Anne Ackerley

Title: From saving to spending: navigating a top retirement concern

We know the top financial fear around retirement is outliving savings. Yet most retirees still have 80% of their pre-retirement savings two decades into retirement.* It’s a paradox that reveals the major challenge of spending down your nest egg. To solve it, we need to explore new solutions.

Graphic: - Source: BlackRock/Employee Benefit Research Institute (EBRI), December 2020.

BlackRock Bottom Line open

When most people think about “planning for retirement,” it’s usually “savings” that first comes to mind.

And that makes sense because, from the time we start working, it’s a mindset that’s reinforced for decades until, one day, we retire. And then it’s time to spend. But, it turns out, that’s easier said than done.

59% of investors say it’s difficult to know how their retirement savings will translate into monthly retirement income.

[Graphic: 59% of investors say it’s difficult to know how their retirement savings will translate into monthly retirement income, BlackRock 2021 DC Pulse]

There are lots of reasons for this, but here are the big ones:

People don’t know how long they are going to live, they don’t know what their expenses are going to be and they don’t know what the market will do.

Yet the burden of figuring this out has increasingly fallen on the individual. Consider the shift from defined benefit plans to defined contribution plans like 401(k)s.

Today, the vast majority of Americans cannot fall back on a pension from their employer. And, while there is Social Security, that wasn’t meant to be the primary source of retirement income.

This is a really hard math problem to solve.

But there is good news. The industry is coming together to address these needs and innovate new solutions to provide retirees with secure income options and greater certainty around their future.

Forward-thinking employers who are moving in this direction can benefit from a more financially secure workforce.

The bottom line is, secure retirement income solutions can help create better retirements. With them, more and more people can feel confident and experience greater well-being across their entire journey.

Even people who have saved diligently often fail to spend – and enjoy – their savings, at least in part due to the uncertainty of how to make savings last. BlackRock developed the LifePath® Spending Tool to help retirees estimate their spending potential year-over-year in retirement.

Visit the tool Visit the tool