As a plan sponsor or financial professional, you have virtually limitless options when it comes to tailoring your client’s retirement plan investment lineup. By providing a diversified lineup of investments to employees, you can help them build a retirement portfolio that meets their needs and helps them pursue their goals.
Most retirement plans include a combination of equity, fixed income, and capital preservation investments. To make decision-making even easier, many plans also offer target retirement date funds that gradually adjust over time to become more conservative as participants near retirement. However, the newest trend in retirement plan lineups is to include a guaranteed retirement income solution.
Supercharging retirement portfolios with guaranteed retirement income
It’s no longer enough to simply save for retirement. The focus has been shifted to how retirees can convert their retirement nest egg into tangible retirement income. With increased market volatility and inflation, guaranteed retirement income has never been more top of mind.
In fact, according to a recent study from the Alliance for Lifetime Income1, 81% of Americans ages 45 to 75 are concerned about reduced spending power in retirement due to rising inflation. And another 79% are worried about a recession driving the economy down and impacting their retirement income. In response, many financial professionals have changed their approach to retirement portfolios to include guaranteed retirement income options like Income America™ 5ForLife.
Developing a revolutionary retirement portfolio solution
Available as target-date funds, a stand-alone balanced fund, or as a balanced fund in a managed account, Income America 5ForLife provides guaranteed lifetime income. The market may go up and down, but with Income America 5ForLife, a lifetime income guarantee of 5% per year2, beginning at age 65, is built in—offering protection against market uncertainty during retirement.
Investing in Income America 5ForLife is as simple as investing in a typical fund, but with the guarantee of income for life. Depending on their investment goals and tolerance for investment risk, employees may invest all or a portion of their retirement portfolio in Income America 5ForLife.
Consider this example: Rob transfers 33% of his account balance, or $20,000, into Income America 5ForLife and contributes an additional $11,200 each year for the next 25 years. These contributions establish Rob’s income base so even if there’s a market downturn, the income base is protected. Thanks to the annual step-up feature, every year on Rob’s birthday, his income base can re-set, stepping up to lock in any gains.
When he retires at age 65, his contributions total $300,000, but thanks to market gains and annual step-up opportunities, his income base locks in at $682,360. He begins receiving lifetime income payments of 5% of his income base every year—$34,118 a year—for the rest of his life.3
Adding Income America 5ForLife to your retirement plan
It’s easy to include Income America 5ForLife within a retirement plan’s lineup. Fiduciary based and SECURE Act compliant, Income America 5ForLife is designed to be flexible, portable, and attractively priced. And now more than ever, employees want the assurance of guaranteed income for life. In fact, according to the American Century 10th Annual Survey of Retirement Plan Participants in 2023, 90% of employees are interested in a guaranteed income feature.
1 2022 Protected Retirement Income and Planning Study, Alliance for Lifetime Income and CANNEX
2 If the joint option is elected, the participant’s payout will be lower than 5%, depending on their age and their spouse’s age.
3 In order to get the income guarantee, Rob must stay invested in Income America 5ForLife. If he withdraws more than the guaranteed annual income in any year, his income base and future guaranteed annual income amount will decrease. Guarantees are subject to the claims-paying ability of the issuing companies.
