In a recent interview, Mercer Partner Neil Lloyd presents the most critical action steps that plan sponsors can take to advance the provision of in-plan income solutions.
For many years now, close observers of the retirement industry have recognized that defined contribution (DC) plans do not naturally help retirees match their cash flow needs in retirement. DC plans, particularly when offering a combination of auto-enrollment, target date funds, and auto-escalation features, have done an ever-improving job of accumulating assets that can be used in retirement. However, when employees retire, what happens next? I recall seeing an Edward R. Murrow-inspired cartoon caption years ago showing a lonely retired employee leaving the office that simply read, “Goodbye and good luck.” Is that the best we can do for our coworkers at the end of their careers?
Anna Rappaport, who chairs the Society of Actuaries’ (SOAs) Committee on Post-Retirement Needs and Risks and the Steering Committee for the Aging and Retirement Strategic Research Program, recently interviewed me to share what we have been seeing in the DC market with regard to retirement income.
The full SOA interview is available here, but this post highlights three key income-related issues:
One of the topics Anna and I explore in some depth are the most critical action steps that plan sponsors can take to advance the provision of in-plan income solutions.
Here are two of the most critical:
In the meantime, it’s been heartening to hear that more plan sponsors are interested in tackling these retirement-income challenges than ever before. Let’s all hope we can convert that interest into action. Certainly, passing the SECURE Act would help.
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