Lifetime Income illustrations: Preparing for Participant Reactions LifetimeIncomeillustrations:PreparingforParticipantReactions

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, 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 and pre-retirees – might react to their lifetime income projections.

^{_{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.}}