401(k) Savers Say Retirement Income Security Should Be A Shared Responsibility

Employees paying into retirement plans are increasingly interested in guaranteed monthly income options and want employers to help them achieve financial security.

More than nine in ten who contribute to 401(k) plans say they believe it is important for plans to offer guaranteed monthly income options that will last throughout their retirement years with all four working adult generations aligned in this.

Almost as many say employers have a responsibility to help them achieve retirement income security, up from 61% two years ago. This is strongest among the two youngest generations of American adults – 57% of Gen Zs and 54% of Millennials – compared to the older cohorts – around one third of Gen Xers and Boomers.

The stats are from a new report from Nuveen, the investment manager of TIAA, and the TIAA Institute which polled more than 2,000 401(k) participants and also revealed that around 90% would be interested in a fixed annuity option in their plan.

"Today's workers see guaranteed retirement income not just as a personal goal - but as a shared mission with their employer," said Brendan McCarthy, head of Retirement Investing at Nuveen. "By acknowledging that they can play a critical role in offering financial security after retirement, plan sponsors can establish trust and goodwill among employees—potentially for a long time."

The research found that few 401(k) plans offer a guaranteed income option currently, although the more innovative plans are exploring how to fix this.

"Incorporating fixed annuities into 401(k) plans is a simple, effective and low-cost way to fill the retirement income design gap. With tools like target-date investments that include a fixed annuity component, sponsors can simplify savings and investing, as well as the ability to convert retirement savings into retirement income," said McCarthy. "A well-designed decumulation strategy isn't just a nice-to-have, it is essential to realizing the full value of a 401(k) plan—and workers agree."

But there is an educational requirement to help employees understand their options and how they can convert savings into lifetime guaranteed income. Employers and plans have a key role to play in this regard.

"While retirees are increasingly interested in lifetime income solutions, many struggle to develop effective withdrawal strategies," said Surya Kolluri, head of the TIAA Institute. "The challenge lies in converting retirement savings into sustainable monthly income—a process that remains unclear to most participants. This knowledge gap makes education and thoughtful plan design more crucial than ever to prevent potentially costly financial missteps at and during retirement."