RADNOR, Pa.--(BUSINESS WIRE)--If employers want to “wow” current and prospective employees, they should offer a guaranteed income option within their retirement plan, according to new research from Lincoln Financial Group (NYSE: LNC). Findings from a new consumer survey reveal that workers indicate a strong preference for employers that offer a guaranteed income option in their retirement plan, with nearly two in three saying they would see it as a “wow factor” when considering a job offer. And in their ideal world, 71% say all employers would offer an in-plan guaranteed income investment option.
From 2016-2019, the number of plans offering in-plan guaranteed income investment options declined1, despite many recordkeepers offering these solutions. Following the passage of the SECURE Act nearly 10 months ago, however, it is now easier for plan sponsors to offer a plan design that includes the option for participants to generate guaranteed retirement income.
Workers surveyed see great value in products that provide guaranteed income in retirement, with more than seven in 10 saying they would use it if offered, and the same number said these solutions would make it easier to budget their money in retirement and they would feel more confident in preparing for retirement. And as auto-enrollment has helped many Americans start on the path to saving for retirement, more than half of workers say they would prefer to be automatically enrolled in an in-plan guaranteed investment option.
“As an industry, we have an opportunity to meet the needs of today’s savers by working with plan sponsors and financial professionals to offer investment options for guaranteed lifetime income within retirement plans,” said Jamie Ohl, Executive Vice President, President, Retirement Plan Services, Head of Life & Annuity Operations, Lincoln Financial Group. “Consumers are clearly ready to transform their retirement plans to more than just accumulation vehicles, so we must focus on helping them translate their savings into a monthly check that will last through retirement — because in planning for retirement, the ultimate outcome is income.”
The importance of guaranteed income increases with each generation, as the availability of traditional pensions and reliance on Social Security continues to decrease. While 87% of Baby Boomers are looking to Social Security for retirement income and 41% of them expect pension plans to provide income as well, just 21% of Millennials, the largest generation in the workforce, believe they’ll be able to rely on a pension and only half think Social Security will be a source of income in retirement2.
With products like Lincoln PathBuilderSM, plan sponsors have the option to add the income investment option to a plan similar to the way they would add any other investment, or as part of a custom target-date portfolio. With a custom target-date portfolio, the account balances will automatically transition over time, to an investment that can provide lifetime income. Participants can then choose to take this as a regular check that will last throughout their retirement to help ensure their basic expenses are covered.
All data in this release, unless otherwise noted, is based on research done by Lincoln Financial Group, using the Qualtrics survey platform, with responses gathered from 1043 U.S. Adults from Sept. 3, 2020 – Sept. 14, 2020. The sample included quotas to be representative of the total U.S. adult population. For additional details from the study, click here.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help people take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, and guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. The company had $270 billion in end-of-period account values as of June 30, 2020. Lincoln Financial Group is a committed corporate citizen included on major sustainability indices including the Dow Jones Sustainability Index North America and FTSE4Good. Dedicated to diversity and inclusion, we earned perfect 100 percent scores on the Corporate Equality Index and the Disability Equality Index, and rank among Forbes’ World’s Best Employers, Best Large Employers, Best Employers for Diversity, Best Employers for Women and JUST 100, and Newsweek’s Most Responsible Companies. Learn more at: www.LincolnFinancial.com. Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at http://newsroom.lfg.com.
1 Guaranteed Income Investment Options in DC Plans, In-Plan GLWB and DIA Availability and Election Tracking Survey, Secure Retirement Institute, August 2020
2 LIMRA Secure Retirement Institute, Retirement Income Reference Book, 4th Edition, 2019