The retirement industry has been talking about guaranteed income for decades. The idea makes sense: if 401(k) plans are supposed to help people retire, shouldn’t they also help participants turn their savings into income?
Yet widespread adoption still hasn’t happened.
There are plenty of reasons why. Cost, complexity, portability concerns and fiduciary risk have all slowed things down. Plan sponsors have plenty on their plates, participants don’t always understand the options, and advisors and providers have their own challenges to work through.
So, what finally turns on the lights?
One answer may be automation. Target date funds didn’t reach widespread adoption until they became part of an automatic approach to retirement saving. Guaranteed income may need a similar path through dynamic QDIAs.
After 20 years, the industry isn’t short on ideas or solutions. The challenge is finding a practical way to get them used.
