08:56 AM

New study: 8 in 10 retirement plan sponsors say participants want guaranteed lifetime income investment options

Nationwide Retirement Institute® survey uncovers the magnitude of the business opportunity for plan advisors and consultants

Columbus, OH – Nearly nine in 10 plan sponsors and participants (88%), respectively, agree that income in retirement is vital to financial security, according to the Nationwide Retirement Institute’s® 2021 In-Plan Lifetime Income survey of plan sponsors, plan participants, and plan advisors or consultants. However, despite recognizing the importance of income in retirement, the survey found participants don’t feel confident in their ability to maximize it. Half of participants (50%) are concerned about being able to manage expenses and lifestyle choices in retirement and 48% are concerned about outliving their income.

Because of these concerns, eight in 10 plan sponsors (81%) believe their employees want guaranteed lifetime income investment options in their employer-sponsored retirement plan. Many plan sponsors are already looking to solve this need for their employees, with four in 10 (41%) saying they don’t currently offer guaranteed lifetime income options but would consider it. Despite this interest, about 60% of advisors and consultants don’t think their plan sponsor clients want to explore these options, which may indicate a missed opportunity.

The study shows many participants are ready to act once a guaranteed lifetime income investment option is available in their retirement plan, with eight in 10 participants (79%) reporting they are at least somewhat likely to rollover a portion of their current retirement savings into one. This percentage is even higher for participants ages 45-54 at 87%, which serves as an opportunity for financial professionals to begin engaging plan sponsors and participants even earlier than the traditional “pre-retirement” stage.

“For many Americans, understanding how their employer-sponsored retirement plan savings translates to retirement income will soon come into greater focus,” said Eric Stevenson, president of Nationwide Retirement Solutions. “New lifetime income illustrations will begin appearing on participant statements over the next year, based on a new requirement created by the 2019 SECURE Act, with some participants seeing this as soon as this month. For some it will be a wake-up call that they haven’t saved enough, and we believe this visibility will lead to even greater interest from plan sponsors for new investment options that help their plan participants address their lifetime income needs.”

For advisors and consultants looking to begin conversations with plan sponsors about guaranteed lifetime income investment options, it’s likely their clients are only waiting for them to make the recommendation. Approximately nine in 10 plan sponsors trust financial advisors or consultants to counsel them on choosing the right options for their company’s retirement plan and consider them to be the primary source for learning more about guaranteed lifetime income investment options.

Retirement plan decision makers are ready to talk about this now. The survey shows seven in 10 plan sponsors report they evaluate their company retirement plan options at least every six months. This is more frequent than most advisors and consultants realize, with more than eight in 10 advisors (82%) saying only a few or none of their plan sponsor clients are evaluating their company retirement plan in the next six months.

“There is an immediate business opportunity for advisors and consultants to initiate conversations with plan sponsors about adding guaranteed lifetime income investment options,” Stevenson said. “Plan sponsors are telling us they’re hungry for more guidance and advisors and consultants are in prime position to help by exploring these solutions with their clients today.”

View an infographic summarizing data from this survey.

Nationwide also provides a variety of in plan guarantee resources for financial advisors and plan consultants.

Edelman Data and Intelligence (DxI) conducted the online survey on behalf of Nationwide July 19-August 4, 2021. Respondents included:

  • 500 company plan sponsors, including business executives, business owners, human resources professionals, and financial management professionals who are full-time workers at U.S. businesses with at least 10 full-time employees. They must also be decision-makers for company retirement plans including 401(k), 403(b), or 457(b) plans.
  • 300 financial advisors or consultants who advise at least one plan sponsor on investment decisions, financial planning, and options.
  • 1,000 plan participants 45+ years of age who work full-time and have access to a 401(k), 403(b), or 457(b) plan through their employer.
About Nationwide

Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor’s. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.

Nationwide Retirement Solutions administers nearly 34,000 retirement plans, protecting more than $173.9 billion in participant assets, and helping secure financial futures for more than 2.6 million participants in the governmental 457, corporate 401(k) and not-for-profit 403(b) markets. Nationwide is committed to serving the retirement industry by doing the right thing at the right time through better participant experiences, administrative simplicity and values that translate to service.