Over the span of their working lives, Baby Boomers have witnessed the birth of 401(k) plans as optional, “supplemental” retirement plans, seen the rapid spread of 401(k) plans throughout the U.S. retirement system, and tracked the evolution of the 401(k) plan into the primary – and often, only -- retirement savings plan to be offered by their employers.
As the first full generation of 401(k) participants begins to retire in record numbers, Boomers have begun to shift gears, focusing on decumulation – the process of converting 401(k) savings into retirement income that will last a lifetime.
As Boomers begin to sweat decumulation details, many of their employer-plan sponsors are coming to their aid, adopting features that promote lifetime plan participation, not only for Boomers, but for the generations that will follow. Along with their consultants and recordkeepers, plan sponsors have begun to implement a dizzying array of retirement income solutions that include both in-plan and out-of-plan offerings, encompassing features such as managed drawdowns, guaranteed minimum benefits and so on.
Let’s be clear: retirement income strategies can be quite complex, as early-adopting plan sponsors have learned. Optimizing retirement income is a multi-faceted problem, considering an array of potential variables, including assets, life expectancy, market risk, inflation, taxes, health care costs, etc.
What’s Missing in the Rush to Replicate Salary in Retirement?