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The Milken Institute believes that in-plan lifetime income solutions are important tools retirees should consider as part of their long-term savings strategy. These products can provide income certainty and hedge against downside market risk. While traditional retail annuities provide lifetime income and can serve a meaningful place in a holistic financial plan, they are complex products with many nuances. Retirement plan participants may not have access to a financial advisor or the time and knowledge required to analyze annuities, including understanding their costs, benefits, risks, and suitability for participants’ unique needs.

In contrast, in-plan income solutions are easily accessible through traditional retirement plans where they must first pass a plan fiduciary’s due diligence, are generally simpler to understand, are varied in design to meet different investment goals, and usually carry lower fees than retail annuities. As more than 11,200 American workers will be turning 65 every day between 2024 and 2027, there has never been a more urgent time to address the retirement income needs of millions of Americans.

This inflation-protected lifetime income is available to most Americans based on their 35-year work history. Still, it alone does not provide most recipients with enough income to live comfortably in retirement. Simply put, we want to ensure that Americans are not living their retirement years with Social Security as their only form of guaranteed, lifetime income or—even worse—their only source of retirement income.