Show me the income

Our 2022 Retirement Income study reflects on the evolving retirement industry today as it faces the pressing need to help participants turn their DC plan savings into long-term retirement income.

Together with Greenwald Research, we connected with 118 plan sponsors and consultants and over 1,000 DC plan participants in the US (all working for large employers with more than 5,000 employees) through online surveys, in-depth interviews, and virtual focus groups.

Due to the global turmoil over the last few years, there’s been a shift in how employees define retirement, and how best they can prepare both mentally and financially. We found there’s an opportunity to provide participants retirement income-specific planning tools, investments, distribution options, and communications designed to help.

In our first finding, we learned that most plan sponsors recognized the importance of helping participants ease the transition from saving to income in retirement. First, by letting participants know they have the option to stay in the plan when they retire, and second, by offering retirement income solutions within the investment menu along with flexible distribution options.

While half of plan sponsors surveyed encouraged participants to stay in plan at retirement, more work needs to be done to generate awareness.

In our second finding, participants often had two intertwined fears First, outliving their retirement savings, and second, spending too much, too soon.

Only 22% were very confident they could create a retirement income strategy on their own.  Which includes determining how much of their retirement savings to withdraw, when and from which financial source.

We also found that participants wanted a reliable income stream to cover their expenses with the flexibility to withdrawal funds as needed – without running out of money along the way. They didn’t know what type of retirement income solutions could achieve this.

Yet when asked, participants felt both guaranteed lifetime income solutions and non-guaranteed monthly income withdrawal solutions would be a good fit for them, in different ways

In our fourth finding, we uncovered that few participants would put all their DC plan savings into just one retirement income solution. 90% of participants preferred two to three choices that included a guaranteed and non-guaranteed option.

Regardless of how many in-plan solutions were offered, eight in 10 participants wanted help choosing which solution would best fit their personal situation.

Finally, we found that three quarters of participants were eager for their employers to start the retirement income conversation earlier

While 78% of plan sponsors reported they provided specific retirement income generation communications, only 38% of participants reported they received those communications.

As participants rely on their DC plan as their largest income source in retirement, plan sponsors have a significant opportunity to help participants of all ages along their planning journey.

Request our white paper to view a complete checklist with detailed action steps for plan sponsors.

To learn more about the findings of our 2022 DC retirement income research study, visit our website or contact your Invesco DC professional.

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Cited Invesco research is based on Invesco’s work with Greenwald Research. Invesco is not affiliated with Greenwald Research. Participant quotes are used with permission.

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DCRIR-VID-1-E  10/22              NA2451274            2022 Invesco Ltd.                             All rights reserved.