If you crave more predictability when you retire, a trending 401(k) plan option could be the answer to your prayers.\u200b<\/p>\n
More of America\u2019s largest investment firms are shaking up the standard target-date fund model to offer guaranteed lifetime returns. Traditionally, these 401(k)s simply transferred your growth-oriented stocks into bonds as you approached retirement. With this new breed of 401(k)s, however, you get to add a popular life insurance product to your portfolio: Annuities.<\/p>\n
Must Read <\/p>\n
Fidelity is the latest investment firm to introduce this new way to save with Freedom Lifetime (1). Set for a 2027 debut, this fund starts out as a standard target-date fund, but it gives retirees the option to roll those savings into annuities from New York Life and Nationwide for guaranteed lifetime income.<\/p>\n
In a press release about the announcement, Molly Cunningham (1), Fidelity\u2019s head of workplace lifetime financial help, said, \u201cOur priority was to maximize the value of lifetime income while keeping the participant and plan sponsor experience simple and easy to adopt.\u201d<\/p>\n
Although Fidelity\u2019s offering is making headlines, it\u2019s actually late to the guaranteed-savings game. Vanguard announced its Target Retirement Lifetime Income Trusts at the end of 2025 (2), and BlackRock has a similar strategy called LifePath Paycheck (3).<\/p>\n
Vanguard\u2019s Head of Multi-Asset Product Management Brian Miller highlighted the stability of these new products as their star attribute. As Miller told Moneywise, \u201cEvery day, thousands of Americans retire, and many worry about outliving their savings. Vanguard\u2019s Target Retirement Lifetime Income Trusts are a new option for 401(k) plans and participants and can help turn savings into steady income, offering both confidence and predictability alongside traditional sources like Social Security.\u201d<\/p>\n
Currently, this 401(k) option isn\u2019t the most accessible, but data suggests it\u2019ll likely become more common among employers. For instance, Callan\u2019s 2025 DC Trends Survey (4) found that 19% of respondents are actively considering fusing their target-date fund model with immediate annuities.<\/p>\n
Are annuities the new pensions? <\/p>\n
In a way, this push for annuities in 401(k)s may become the 21st-century pension plan.<\/p>\n
Story Continues <\/p>\n
Although pensions still exist, they\u2019ve become far less prevalent over the past few decades. The Bureau of Labor Statistics\u2019 data now suggests only about 15% of private-sector workers have a traditional defined benefit plan (5).<\/p>\n
Even back in 2019, the Employee Benefit Research Institute (EBRI) (6) sounded the alarm on this trend, highlighting a 71% decline in employment-based defined benefit pension plans since 1979.<\/p>\n
That major transition from pension plans to 401(k)s shifted a lot of responsibility from employers to employees \u2014 and it\u2019s producing a lot of anxiety about spending in retirement.<\/p>\n
In fact, a recent Corebridge Financial (7) survey showed it\u2019s more likely for retirees to panic about losing money before they die (56%) than leaving behind too much money (6%). The irony is that this fear of overspending often leads to unnecessary hoarding.<\/p>\n
In the eyes of most retirees, a reliable income would soothe all of their fears. The same Corebridge Financial survey found that three out of four respondents agreed a guaranteed lifetime income would \u201cmake them happy (7).\u201d<\/p>\n
Read More: About 1 in 5 Americans over 50 has zero retirement savings \u2014 here’s the catch-up plan you can actually use<\/a><\/strong><\/p>\n Are annuities the ultimate retirement upgrade? <\/p>\n Annuities can\u2019t promise the gains you might get from index funds, but some might say, \u201cso what?\u201d After all, that\u2019s not the point of these products. The true \u201cwealth\u201d here is \u201cpeace of mind.\u201d<\/p>\n It\u2019s true that annuities will add predictability to your retirement savings for life, which can help you spend without the fear of running out.<\/p>\n Still, there are tradeoffs to consider. For instance, once you put funds into an annuity, the income usually isn\u2019t adjusted for inflation. So, even though you\u2019re getting the same amount per month, rising prices can erode your purchasing power over time.<\/p>\n Also, the lack of volatility works both ways. While you avoid downturns in the stock market, you also don\u2019t get to take advantage of potentially higher long-term growth.<\/p>\n The good news is that these updated 401(k) plans let you mix-and-match stocks, bonds, and annuities according to your preferences.<\/p>\n If you\u2019re still not sure how to fit annuities into your retirement plan, it could help to ask yourself this simple question: \u201cWhat portion of your essential expenses do you need guaranteed?\u201d Be sure to factor in your risk preferences and whether you have other sources of income like Social Security and a pension when calculating your \u201ccomfort zone.\u201d<\/p>\n Once you know how much you need each month, you should have an easier time figuring out just what to put in these insurance plans and what to leave invested for a stress-free retirement.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>.<\/p>\n Fidelity (1<\/a>); Vanguard (2<\/a>); BlackRock (3<\/a>); Callan (4<\/a>); Bureau of Labor Statistics (5<\/a>); EBRI (6<\/a>); Corebridge Financial (7<\/a>)<\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: Fidelity, Vanguard and BlackRock are all adding annuities to 401(k) plans \u2014 betting retirees want pension-like income<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"If you crave more predictability when you retire, a trending 401(k) plan option could be the answer to…\n","protected":false},"author":3,"featured_media":865275,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[15],"tags":[11879,64,91025,51521,352676,99500,194596,66421,255,104938,700,9593,711,67,132,68],"class_list":["post-865274","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-blackrock","tag-business","tag-corebridge-financial","tag-fidelity","tag-immediate-annuities","tag-investment-firms","tag-lifetime-income","tag-pension-plan","tag-personal-finance","tag-predictability","tag-retirement","tag-robert-kiyosaki","tag-social-security","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116744788746571698","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/865274","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=865274"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/865274\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/865275"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=865274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=865274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=865274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}