We knew it was coming, and now it’s here: BlackRock announced today that LifePath Paycheck, its new retirement income solution, is now available in defined contribution plans.
“We believe LifePath Paycheck will one day be the default retirement investment strategy, providing access to a predictable, paycheck-like income stream that can help improve the quality of life for millions of Americans”
BlackRock’s Larry Fink
The LifePath Paycheck solution takes a new approach to retirement income by providing access to guaranteed income through a target date fund. Plan participants will have the option to access the guaranteed income as early as age 59½ by purchasing annuity contracts issued by Equitable and Brighthouse Financial.
“We believe LifePath Paycheck will one day be the default retirement investment strategy, providing access to a predictable, paycheck-like income stream that can help improve the quality of life for millions of Americans in retirement,” said Larry Fink, Chairman and CEO of BlackRock, the world’s largest asset manager.
Fink recently highlighted the April debut of LifePath Paycheck in his 2024 annual letter to investors. “I believe it will one day be the most used investment strategy in defined contribution plans,” Fink said in the letter. “We’re talking about a revolution in retirement.”
Avangrid, Adventist HealthCare Retirement Plans, and Tennessee Valley Authority Retirement System will be among the first to implement the strategy as the default investment option for their employees’ defined contribution plan, with additional plan sponsors to follow in the coming months. To date, 14 plan sponsors, with plans totaling $27 billion in target date assets, are planning to make LifePath Paycheck available to 500,000 employees, with several other large plan sponsors expressing interest.
“LifePath Paycheck is a game changer in our effort to attract, retain, and empower talent. By taking some of the guesswork out of financial planning, we’re enabling our employees to focus on what they do best—accelerating transformation for our customers and communities by pioneering a brighter clean energy future,” said Paul Visconti, Senior Director of Total Health and Retirement Programs at Avangrid.
Access to an option for guaranteed income could help alleviate the stress many Americans currently face about the uncertainty of outliving their savings. According to early findings from BlackRock’s ninth annual Read on Retirement survey, nearly two-thirds (60%) of those surveyed worry they’ll outlive their retirement savings and 99% say having guaranteed retirement income would help ease that concern. Beyond financial benefits, 93% say having more certainty around retirement income would help their mental health today.
Retirees agree—94% surveyed also believe employers should provide their employees with a retirement income solution through their workplace plan. Additionally, the survey found that 99% of plan sponsors feel responsible for helping plan participants generate and/or manage their income in retirement.
“A top concern among American workers is the fear of running out of money during retirement. And yet the industry has focused on helping people understand they need to save – but not how to manage spending in retirement, even as companies have shifted from defined benefit to defined contribution plans,” said Anne Ackerley, Head of Retirement at BlackRock. “With this solution, we’re rethinking retirement. And part of that was working across the industry to build something new.”
Coordinated industry effort
BlackRock has worked closely with recordkeepers to facilitate the implementation of LifePath Paycheck for their clients. Fidelity Investments and Bank of America are among the first to enable access to the solution on their recordkeeping platforms. Other recordkeepers, including Voya Financial, are also planning to make it available.
In addition, BlackRock worked closely with insurers Equitable and Brighthouse Financial on providing the LifePath Paycheck solution’s income stream option.
“Equitable’s mission is to help our clients secure their financial well-being so they can pursue long and fulfilling lives,” said Aaron Sarfatti, Chief Strategy Officer and Head of Institutional Businesses and New Ventures at Equitable. “The addition of secure income through defined contribution plans presents a profound opportunity to expand on the delivery of our mission. We feel privileged to support BlackRock in its LifePath Paycheck solution as it helps the record number of Americans reaching traditional retirement age reduce the risk of outliving their savings.”
To help educate plan participants, BlackRock developed MyLifePath, a digital experience that shows how today’s contributions can translate into income in retirement.
SEE ALSO:
• BlackRock’s Fink Touts April Launch of ‘LifePath Paycheck’ TDF Strategy in Letter to Investors
• New Wave of Annuities in TDFs: ‘It’s Complicated’
• Exploring the ‘Annuities in TDFs’ Trend with Morningstar’s Jason Kephart
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
