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BlackRock Intros Paycheck-Style Retirement Offering

BlackRock

BlackRock has debuted a savings product designed to give retirees a guaranteed, paycheck-style income.

The asset management giant on Thursday (April 25) announced its LifePath Paycheck solution, which gives plan participants the option of accessing a guaranteed income as early as age 59 years and six months by purchasing annuity contracts.

“A top concern among American workers is the fear of running out of money during retirement,” Anne Ackerley, head of retirement at BlackRock, said in a news release.

“And yet the industry has focused on helping people understand they need to save — but not how to manage spending in retirement, even as companies have shifted from defined benefit to defined contribution plans. With this solution, we’re rethinking retirement. And part of that was working across the industry to build something new.”

According to the release, Avangrid, Adventist HealthCare Retirement Plans and Tennessee Valley Authority Retirement System will be among the first to make the LifePath solution the “default investment option” for their employees’ defined contribution plan.

So far, 14 plan sponsors, with plans totaling $27 billion in target date assets, say they plan to make LifePath Paycheck available to 500,000 employees.

A report Thursday by CNBC on BlackRock’s offering included analysis from experts such as Dan Doonan, executive director at the National Institute on Retirement Security, who said annuity choices facing consumers are “incredibly complex.”

He predicted that BlackRock’s move will likely lead other groups to upgrade their retirement plan annuity options.

“It might look very different in 10 years,” said Doonan.

Meanwhile, recent research by PYMNTS Intelligence shows that 60% of consumers believe that retirement is out of reach for them.

That report, “New Reality Check: The Paycheck-To-Paycheck Report: The Financial Goals Edition,” found that while 42% of consumers who don’t live paycheck-to-paycheck are saving for retirement, that share drops to 28% for consumers who are living paycheck-to-paycheck without issues paying bills.

And “those numbers fall even further when it comes to paycheck-to-paycheck earners with bill pay issues, all the way to 17%,” PYMNTS wrote.

“While those numbers can’t answer whether paycheck-to-paycheck earners are giving up on retirement, it may be reasonable to assert that a portion of these consumers may simply not know how to start saving for long-term financial goals amid short-term bill pay pressures,” the report said.