A shift in retirement: Why more companies back guaranteed income 

• Key Insight: Discover how employers shift 401(k) designs toward guaranteed lifetime income options.
• What's at Stake: Plan sponsors risk participant shortfalls and reputational exposure if income solutions are ignored.
• Forward Look: Prepare for more defaulted guaranteed-income options and income-focused plan disclosures.
  Source: Bullets generated by AI with editorial review

A growing number of employers are throwing their support behind retirement plans that include guaranteed lifetime income options, according to a new MetLife poll. 

This trend marks a shift away from the long-held belief that the best way to save for retirement was to build a large nest egg, said Roberta Rafaloff, head of institutional income annuities at MetLife. 

"Plan sponsors are no longer debating, 'Does retirement income matter?'" Rafaloff said. "They're increasingly aligned that there's a problem, and now they need to figure out how to solve it."

According to MetLife's 2026 Lifetime Income Poll, 90% of defined contribution (DC) plan sponsors say the core purpose of a DC plan should be to serve as an income source during retirement. Fifty-nine percent support requiring 401(k) plans to offer lifetime income at retirement, and 54% back defaulting a portion of savings into guaranteed income.

When asked about lump sums, 83% of respondents said they may not be enough on their own to protect against outliving savings, up from 72% in 2016.

Rafaloff said there are several factors that are changing the way people think about — and prepare for — retirement. Americans are living longer: A person born in 2024 can expect to live to age 79, an increase of more than half a year from 2023, according to a recent report from the National Center for Health Statistics. "Longer lifespans mean savings need to last longer," Rafaloff said. "That really does increase concerns about running out of money."

Additionally, most people — especially young workers —  don't have access to a defined benefit plan, and so their only source of guaranteed income at retirement is Social Security, Rafaloff added. 

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Compounding the issue is the unpredictability of healthcare and housing costs, along with inflation. "That really makes it harder for employees to self-manage the drawdown strategies that were typically available in defined contribution plans," Rafaloff said. 

Responsibility for retirement outcomes has shifted sharply from employers to workers over the past several decades, driven largely by the decline of traditional pension plans. According to the Employee Benefit Research Institute, participation in private-sector defined benefit plans fell from 28% of wage and salary workers in 1979 to less than 1% in 2024. 

Over the same period, defined contribution plans — such as 401(k) plans — expanded significantly, with participation rising from 7% to 44%.

Keeping it simple

Rafaloff joined MetLife in 1988 and has worked in the industry for nearly 40 years. Asked about the biggest mistake people make in retirement today, she said it is treating a 401(k) or defined contribution plan balance as a lump sum at retirement.

She pointed out that prior to the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019, retirement statements typically focused on account balances and workers were left to interpret what those savings might mean in practice. 

The legislation required plan sponsors to provide participants with clearer illustrations of how their accumulated savings could translate into monthly retirement income. 

Read more: Vanguard and TIAA launch guaranteed lifetime income solution for 401(k)s

"I think that is going to transform how people think about their defined contribution plan and really put it into perspective," Rafaloff said, "so that they don't make the mistake of taking the lump sum and buying the proverbial boat or second home."

For benefit leaders, the findings of MetLife's Lifetime Income Poll should serve as evidence that companies are increasingly aligned around the need to help plan participants turn savings into dependable income in retirement.

The results also underscore the importance of simplicity in plan design, she said. "The more complex you make it — the more complicated in terms of choices and things people have to think about — the more inertia is going to kick in and people will do nothing," Rafaloff said. "And then what's the point?"