Vestwell’s 2024 Savings Trends Report reveals that 98% of survey respondents attributed some level of importance to having guaranteed lifetime income payments, such as life annuities, as part of their workplace retirement benefits. These payments provide a steady, predictable income for retirees, covering essential living expenses and offering long-term financial stability.

With a dependable source of income, employees are one step closer to financial security and, with that, peace of mind. Incorporating lifetime income can differentiate your 3(38) offering and contribute to a holistic financial wellness program that addresses the retirement needs and concerns of both your clients and their employees.

Lifetime Income as a Workplace Benefit

For most employees, achieving peace of mind in their golden years requires retirement security. Aside from pension plans, which have become increasingly less common, annuities are one of the only retirement products that can provide your clients and their employees, and potentially their surviving spouses, with income for life.

A robust financial wellness program––one that prioritizes the needs of the modern-day employee––will offer the opportunity for retirement annuities. By incorporating lifetime income as a workplace benefit, your clients can support employees through the accumulation of their assets throughout their working lives, as well as the decumulation of their assets during retirement.

Key Benefits of Lifetime Income for Employees

Guaranteed lifetime income provides several key benefits for your clients and their employees, including the simplification of asset decumulation, the opportunity to diversify their retirement strategy, and, potentially, optimal financial security.

Simplify Asset Decumulation

Lifetime income simplifies the decumulation of assets by providing retirees with a clear and manageable way to draw down their savings. When employees stop working, they can choose to convert a portion of their retirement savings into a guaranteed lifetime income stream, so that they receive a steady, predictable monthly sum for the rest of their lives and, potentially, for the life of a surviving spouse. This eliminates the stress of budgeting for an unknown retirement duration and protects against the risk of outliving their savings.

Diversify Employee Retirement Strategies

Retirement annuities provide flexibility and freedom for diversification. With lifetime income, retirees can tailor their financial plans to meet their unique needs, goals, and risk tolerance. Any savings that employees do not convert to lifetime income remain invested in growth opportunities. This balance gives retirees the freedom to access these funds as needed, whether for unexpected expenses, discretionary spending, or to leave as a legacy. This level of personalization allows retirees to build a diversified retirement strategy that includes a mix of guaranteed income and investment-driven growth, which can be adjusted as their needs change over time.

Offer Guaranteed Financial Security

A guaranteed stream of income for essential expenses is a cornerstone of financial security in retirement. The assurance of steady, predictable payments, even during a market downturn, provides retirees with guaranteed coverage for everyday needs such as housing, food, and healthcare. Employees who rely on withdrawals from investment accounts are vulnerable to both market and longevity risks. However, with retirement annuities, their income is defined and remains dependable.

Beyond the financial benefits, the sense of security provided by guaranteed lifetime income can also play a crucial role in helping your clients attract and retain top talent. For your clients’ employees, reliable payments are empowering, providing an extra layer of protection in retirement. Expanding your offering to include retirement annuities adds immense value for clients and allows you to better support them.

Conclusion

Offering a retirement plan that includes lifetime income as part of a holistic financial wellness program shows that your clients are committed to their employees' financial well-being, both during their working years and in retirement. The high level of diversification and personalization offered by annuities make them an attractive choice for people in all phases of life. Retirement annuities provide the assurance of regular payments that generally offset market or longevity risks throughout employees’ golden years. By incorporating lifetime income into your 3(38) offering, you are not only helping your clients and their employees achieve retirement security but also invaluable peace of mind.

This article, as with all others on our website, are intended for general education purposes only and not as a recommendation, solicitation, or endorsement of any investment or strategy. All investments have risks, including the total or partial loss of principal. Annuities also have risks and can be complex and are accompanied by a variety of fees and expenses such as surrender charges, mortality and expense risk charges and administrative fees, and can have high commissions. Annuities are insurance contracts and may bear credit and other risks relating to the underwriter, they are not guaranteed by the FDIC, SIPC, or any other federal agency. There are also different forms of annuities, such as immediate and deferred, that can have other complexities, costs, and risks. Vestwell does not provide legal, tax, financial, or investment advice to any individual. Investors should consult their own qualified professional before making any decisions about their investments.