Designing Retirement Plans that Help Ensure Income for Life

As your employees approach retirement, they’ll need help understanding how to make their workplace retirement plan assets last.

Employers have an important role to play in designing retirement plans that can help ensure income for life. While it may be tempting for retirement plan participants to take a lump sum from a pension or 401(k) plan, new research commissioned by MetLife and conducted by Harris Poll shows that one in five recipients of a lump sum payment (21%) from their workplace retirement plan depleted those funds in an average of just 5 ½ years.

The MetLife Paycheck or Pot of Gold StudySM, released in April 2017, found that when plan participants are given the option to choose between a lump sum (a proverbial pot of gold) or an income annuity (a paycheck for life), they may not be receiving key information — like how the income they could expect from an annuity compares to a lump sum, how long they could live in retirement, or their risks of running out of money. Additionally, plan participants may not have the ability to convert some or all of their retirement plan assets into a guaranteed stream of income.

Employers can provide support by sharing useful information, tools and disclosures that can help employees fully understand the choices presented to them — and avoid these risks:

  • Early overspending of retirement funds
  • Investing complexity, and managing a large sum of money on their own
  • Underestimating how long they will likely live in retirement

Learn more in our “MetLife Paycheck or Pot of Gold StudySM,” new research commissioned by MetLife and conducted by Harris Poll.