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People save for much of their working lives, accumulating a large sum of money that they will use for their living expenses in retirement.  But as more and more Americans retire without a traditional pension (chart), they are recognizing the value of creating a guaranteed stream of income throughout their years in retirement.

A recent LIMRA Secure Retirement Institute study found that 8 in 10 U.S. workers believe that employers should provide ways to convert savings into retirement income.  Younger workers are most interested in this option with 90 percent of those 18-34 saying they somewhat or strongly agree that employers should provide ways to convert savings into retirement income.

Today, almost 60 percent of private-sector American workers have access to a defined contribution plan through their employer1, where they can systematically save for retirement. While these plans have many positive attributes, most do not offer an in-plan income option.  In fact, according to Secure Retirement Institute's in-plan guarantee research, only a little more than 21,000 employers currently offer in-plan guarantees (representing less than one percent of U.S. workers). 

While many Americans can expect to live as long as 20 to 30 years in retirement, Secure Retirement Institute research shows many retirees underestimate their potential longevity, which could have severe consequences in the later years of retirement.  Creating a guaranteed income from their retirement plan's savings could make financial planning for retirement much more accurate.

Issues surrounding safe harbor and portability have hampered employer adoption rates - but Secure Retirement Institute is seeing more and more interest both from employers and their workers.  Once some of these matters are resolved, we anticipate employers and their workers will embrace this opportunity to create guaranteed income for retirement.

1 National Compensation Survey, March 2013, Bureau of Labor Statistics

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