A new solution allowing employees to convert all or a portion of their retirement savings—from a 401(k), 403(b) or 457(b)—into an immediate income annuity is now available nationally from Fidelity Investments.
Today Fidelity announced the broad availability of Guaranteed Income Direct, providing consistent, pension-like payments throughout retirement.
“Many people feel anxious about how to generate income in retirement and want to reduce the risk of outliving their assets.”
Fidelity’s Keri Dogan
“A key challenge for employees as they transition from saving for retirement to living in retirement is ensuring there’s enough predictable income to cover essential expenses,” said Keri Dogan, senior vice president, Financial Wellness and Retirement Income Solutions at Fidelity. “Many people feel anxious about how to generate income in retirement and want to reduce the risk of outliving their assets. Through solutions such as Guaranteed Income Direct, individuals can move into retirement with a greater sense of financial security, knowing they’ll be better able to cover their everyday expenses.”
In a press release, Fidelity noted that retirement preparedness is a source of financial stress for employees: 79% are worried they won’t have enough money to last their lifetime, and 85% feel employers should take more responsibility in helping them prepare for retirement. As such, guaranteed income solutions within workplace retirement plans have become increasingly popular.
Fidelity research shows the number of retirees and pre-retirees deciding to stay in plan past their retirement date has continually increased over the past 10 years, with 65% of participants expressing interest in having guaranteed income options in their workplace plans. For employers, the feelings are mutual: 81% of plan sponsors would prefer to give retirees the flexibility to stay in plan and withdraw assets throughout their retirement years.
A guaranteed income solution can help ensure the ability to cover essential expenses in retirement, particularly for employees who may not be able to do so through other predictable sources of income alone, such as Social Security and pensions. Guaranteed Income Direct allows employees to set up pension-like payments by purchasing an immediate income annuity through an insurer selected by an employer. Currently, MetLife, Pacific Life, Prudential Financial, and Western & Southern Financial Group are available on the platform, with additional insurers to be added in the future.
The solution offers access to lifetime income for employees at all savings levels, with the flexibility to convert all or a portion of one’s retirement plan savings—regardless of where their money is saved—into monthly income based on their personal needs. In addition, savings not converted can remain in the workplace savings plan.
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