What's Happening?
A recent discussion at the Employee Benefit Research Institute's Virtual Policy Forum highlighted the evolving landscape of retirement income options as U.S. workers increasingly change jobs. On average, workers remain in one job for five years, leading to frequent job changes throughout their careers. This trend impacts retirement plan participation and income withdrawal options post-retirement. The forum discussed various in-plan retirement income options, including systematic withdrawals, hybrid target date funds, and managed accounts, which offer customization and personalization to meet diverse retirement needs.
Why It's Important?
The frequent job changes among U.S. workers pose challenges for retirement planning, affecting both participation in employer-based plans and the effectiveness of investment options. As retirement income options evolve, workers and plan sponsors must adapt to ensure financial security in retirement. This shift has significant implications for financial advisors, retirement plan providers, and policymakers, who must address the needs of a mobile workforce and promote engagement with retirement planning.
What's Next?
Plan sponsors and financial advisors are expected to continue exploring innovative retirement income solutions to cater to the changing workforce dynamics. This may involve enhancing communication and education efforts to increase participant engagement and awareness of available options. The industry may also see a rise in target date funds with embedded annuity components as a response to growing demand for stable retirement income solutions.
Beyond the Headlines
The evolving retirement landscape reflects broader economic and social trends, including the gig economy and increased workforce mobility. These changes may drive further innovation in retirement planning, emphasizing flexibility and personalization to accommodate diverse career paths and financial goals.
