Everyone needs to plan for the specific future they want, but the options for securing the income needed to support a long, happy retirement may be out of reach for some—or introduce unintended consequences that could stand in the way of better outcomes.
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Life. Career. Ambition.
Each person is unique,
so why should retirement
be any different?
There’s a practical solution:
The solution
Putting Confidence Back into Retirement
For over a decade, AB has partnered with large defined contribution (DC) plans to deliver default solutions that give participants all the benefits of target-date funds—with the opportunity to access guaranteed income for life.
Income is a critical link to retirement security, and our surveys show that participants need help. Some, worried about uncertain markets, don’t spend enough of their savings to fully enjoy their retirement. Others may not save enough, or if they spend too much too soon, they risk running out of money.
That’s where AB’s Lifetime Income Strategy comes in. It’s a flexible, cost-effective, personalized solution that helps alleviate worries about retirement security. It’s a program where participants can build a sustainable, secure lifetime income stream—and see the progress as they do.
The Formula for a Secure Future
The Formula for a Secure Future
Why it matters
It's a Complex World—Addressing the Challenges
Challenge
Almost half the participants we've surveyed believe that they can withdraw 7% or more of their assets annually in retirement—a level that would likely cause them to run out of money. A realistic withdrawal amount would probably be near 2%. With a guaranteed income solution, it could be much higher.
Solution
Insurance incorporated into a DC plan gives participants confidence and clarity, as they know exactly what their guaranteed income will be at retirement. This security could help them boost sustainable withdrawal rates on average by 70% or more.
Challenge
Most income insurance solutions eliminate longevity risk—the risk that participants run out of money in retirement. But some have dangerous side effects: the risk of dying early (mortality risk) and leaving beneficiaries with nothing.
Solution
AB's Lifetime Income Strategy solves longevity and mortality risk by insuring the income stream throughout retirement and allowing participants to pass on any remaining assets to beneficiaries after death.
Challenge
Our research shows that 67% of participants would rather accept a smaller income payment in retirement ($40,000 per year) and keep access to their money and growth potential than receive a higher income payment of $50,000 with no access to their savings.
Solution
AB's Lifetime Income Strategy not only offers participants full access to their savings, but also preserves income in down markets. Participants also benefit from market upturns, even in retirement.
Income Awareness
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Income Awareness
Challenge
Almost half the participants we’ve surveyed believe that they can withdraw 7% or more of their assets annually in retirement—a level that would likely cause them to run out of money. A realistic withdrawal amount would probably be near 2%. With a guaranteed income solution, it could be much higher.
Solution
Insurance incorporated into a DC plan gives participants confidence and clarity, as they know exactly what their guaranteed income will be at retirement. This security could help them boost sustainable withdrawal rates on average by 70% or more.
Longevity and Mortality
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Longevity and Mortality
Challenge
Income insurances eliminates longevity risk:the risk that participants run out of money in retirement. But there's a side effect—the risk of dying early (mortality risk) and leaving beneficiaries with nothing.
Solution
AB’s Lifetime Income Strategy solves longevity and mortality risk by insuring the income stream throughout retirement and allowing participants to pass on any remaining assets to beneficiaries after death.
Growth and Liquidity
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Growth and Liquidity
Challenge
Our research shows that 67% of participants would rather accept a smaller income payment in retirement ($40,000 per year) and keep access to their money and growth potential than receive a higher income payment of $50,000 with no access to their savings.
Solution
AB’s Lifetime Income Strategy not only offers participants full access to their savings, but also preserves income in down markets. Participants also benefit from market upturns, even in retirement.
The Cost of Doing Nothing
Providing a comprehensive solution isn’t only good for participants, it’s also good for business.
Did you know?
Research shows that stressed employees worrying about their retirement future are less productive, less engaged and may even put off retirement. Just a one-year delay could cost an employer an extra $50,000 annually.
Good for You and Your Employees
AB’s Lifetime Income Strategy provides participants with the financial confidence to retire, improves productivity, and helps retain and attract talent—all of which bolster a company’s bottom line.
"Why Employers Should Care About the Cost of Delayed Retirements,”
Prudential Financial, 2019.
AB’s Inside the Minds of Plan Participants data are from 2021.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from age 65 to 100, comparing sustainable withdrawal rates from solutions that utilize insurance versus sustainable withdrawal rates from a standard TDF.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from age 65 to 100, comparing sustainable withdrawal rates from solutions that utilize insurance versus sustainable withdrawal rates from a standard TDF.
AB’s Inside the Minds of Plan Participants data are from 2021.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from age 65 to 100, comparing sustainable withdrawal rates from solutions that utilize insurance versus sustainable withdrawal rates from a standard TDF.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from age 65 to 100, comparing sustainable withdrawal rates from solutions that utilize insurance versus sustainable withdrawal rates from a standard TDF.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from
age 65 to 100, comparing sustainable withdrawal rates from solutions that
utilize insurance versus sustainable withdrawal rates from a standard TDF.
Estimates based on 2Q:2022 AB Capital Markets Engine 10,000 trials, from
age 65 to 100, comparing sustainable withdrawal rates from solutions that
utilize insurance versus sustainable withdrawal rates from a standard TDF.
AB’s Inside the Minds of Plan Participants data are from 2021.
AB’s Inside the Minds of Plan Participants data are from 2021.
Leveling the Retirement Income Playing Field
A Comprehensive Framework for Evaluating Diverse Lifetime Income Solutions
Our latest research provides a framework to help defined contribution plan sponsors and consultants evaluate and select an income solution that meets participants’ individual needs.
To download the full research report, please enter your details below:
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For illustrative purposes. Retirement age is dependent on individual circumstances.
For illustrative purposes. Retirement age is dependent on individual circumstances.
Implementation
Flexible and Straightforward Implementation
AB’s Lifetime Income Strategy is a fully integrated solution that can be used as a default option to help drive participant usage. Our team has been partnering with plan sponsors for over a decade, helping to engage with participants and making implementation as easy as possible.
A Streamlined Process
AB’s servicing team helps plan sponsors define their
goals
Asset allocation is designed to meet plan sponsor and
participant needs
Implementation includes full support to onboard plan
Active communication with participants aids engagement
Ongoing partnership supports enhancements
Making Retirement Income Personal
We care as much about your participants as you do. That’s why we take pride in our award-winning educational and practical communications program, underpinned by the dedicated support of our team.
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A Committed, Caring Partner
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Support for Participants
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Support for Plan Sponsors
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Going Above and Beyond
Resources