- Key Insight: Discover how embedding guaranteed lifetime income in workplace plans could shift retirement outcomes.
- What's at Stake: Employers, policymakers risk widening retirement shortfalls and fiscal pressures without structural reforms.
- Supporting Data: Only 12% of private sector workers now have pensions, versus 70% in 1975.
- Source: Bullets generated by AI with editorial review
America's retirement system is at a pivotal turning point, and a number of changes are needed to help more people prepare for life after work, according to a leading U.S. financial services organization.
TIAA's new Policy Roadmap calls on employers to expand access to
Traditional pensions, once a cornerstone of company retirement plans, have largely gone away — just 12% of private sector workers have access today compared to 70% in 1975. This leaves many new challenges ahead: While the roadmap stopped short of calling the country's retirement system broken, nearly 45% of U.S. households are projected to run short of money in retirement, TIAA found.
"We're focused on helping Americans get both
"This Roadmap is part of TIAA's broader advocacy work to translate our Retirement Bill of Rights principles into concrete actions that employers, workers, and policymakers can take right now."
On the employer side, Spence highlighted two key steps that companies can implement immediately: Improve employee awareness of the
"This is especially important if the employer provides a matching contribution so that employees don't leave money on the table," Spence said. "Employers should encourage employees to view their retirement plan as a lasting income source, including through guaranteed lifetime income solutions."
He suggested integrating automatic features like auto-enrollment and auto-escalation — straightforward steps that can boost retirement readiness without requiring complex plan designs.
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While there are many measures that companies can take to help their employees prepare for retirement, some policy reforms are essential to fix systematic issues, said Spence, and he highlighted two: Our Qualified Payout Option (Q-PON) and the Automatic IRA Act.
Q-PON would require employers to provide plan participants with a menu of payout options when
"This dual approach — employer action plus smart policy — is how we close the access gap, savings gap and guarantee gap, and ensure every American worker can retire with dignity," Spence said.
When trying to determine whether these changes by companies are actually improving outcomes, Spence suggested reviewing participation rates and contribution levels, and asking questions like: Are they saving enough to meet employer matches?
Employers can also track average account balances and whether workers are utilizing catch-up contributions as they age.
"When employers monitor how employees engage with their retirement plans and how they are saving, it allows them to adjust their offerings to better serve the workforce," Spence said.
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As it's currently organized, today's retirement system focuses largely on accumulating savings in defined contribution plans, and retirees then face the challenge of converting that lump sum into sustainable lifetime income, Spence pointed out. He quoted Nobel Prize-winning economist and professor William F. Sharpe, who described the process of spending down one's assets as "the nastiest, hardest problem in finance."
Less than 20% of 401(k) plans offer participants access to lifetime income, and 58% of retirement savers cite outliving their assets as their greatest fear, Spence said.
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"Our roadmap addresses this by advocating for guaranteed income solutions embedded directly into workplace plans through initiatives like Q-PON, which would give retirees a menu of payout options including annuities, and requiring employers to provide retirement income education to participants," Spence said.
