More workers are inquiring about guaranteed lifetime income products, reports new research from BlackRock.
Surveying just over 1,000 defined contribution (DC) plan participants, the 2021 BlackRock DC Pulse Survey finds that 89% of participants are interested in owning a product designed to generate retirement income, and almost nine in 10 believe that having guaranteed income in retirement would have a positive impact on their financial wellbeing.
Interest among Millennial participants was strong—94% stated they are interested in owning a product designed specifically to generate retirement income, while 89% of Gen Xers and 83% of Baby Boomers shared the same interest.
The growth in awareness hasn’t only applied to working participants—retirees are recognizing its benefits, too. Of 311 retiree respondents, 76% noted how owning a guaranteed lifetime income product made a bigger difference than they originally believed, while 78% believed they would have benefited from a guaranteed income product if offered to them. Ninety-six percent of plan sponsors also revealed an added sense of responsibility in offering these products, and 82% say they are likely to add an annuity solution in the next 12 months.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 decreased hurdles for plan sponsors to offer in-plan lifetime guaranteed income products, but its adoption has been slow as of late, due to uncertainty, issues of portability and impacts brought on by the coronavirus pandemic.
While the study found that most workers are still on track to save adequately for retirement (87%), almost half of respondents indicated personal concerns over retirement income.
Fifty-five percent of respondents said they worried over the thought of having to generate their own retirement income, while 59% stated difficulty in translating retirement savings into monthly income. Sixty percent worry they will outlive their retirement savings, and 77% are looking for help to get through retirement rather than simply reaching it.
As more participants inquire about guaranteed lifetime income solutions, forecasts show a rebound for most annuity products in 2021. The Secure Retirement Institute (SRI) forecasts that all individual annuity products, except traditional variable annuities and fixed-rate deferred annuities, will recover this year due to improving economic conditions and high demand, with products including protection features reaching significant value. By 2025, SRI expects the annuity market to grow as much as 30%.
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