Vanguard and TIAA Launch Target-Date Fund with Built-in Lifetime Income Annuity

Vanguard and TIAA have partnered to introduce a new target-date collective investment trust (CIT) series with an integrated lifetime income annuity option, exclusively available through 401(k) plans. This collaboration combines Vanguard’s expertise in target-date funds with TIAA’s century-long legacy in annuities to provide retirees with a guaranteed income stream for life. The new product, named Target Retirement Lifetime Income Trusts, will incorporate the TIAA Secure Income Account, allowing participants to convert a portion of their retirement savings into predictable, lifelong income.\n\nThe Target Retirement Lifetime Income series follows Vanguard's traditional glide path until age 55, after which it begins allocating to the TIAA annuity, reaching 25% of the portfolio by age 65. Participants will have the option to convert this annuity portion into lifetime income payments. This offering aims to address growing demand among workers and plan sponsors for income security beyond Social Security benefits.\n\nMorningstar highlights that the TIAA Secure Income Account carries no explicit expense ratio, which should keep overall fees competitive with or lower than Vanguard’s standard Target Retirement Funds. Vanguard currently manages around one-third of the $4.5 trillion target-date market, making this launch a significant development in retirement solutions.\n\nWhile other firms like BlackRock have introduced target-date products with annuity options, Vanguard’s entry marks its first new target-date series launch since 2003 and may signal a broader trend toward integrating guaranteed income features within defined-contribution plans. However, Morningstar notes that despite asset growth, annuity-enhanced target-date funds still represent a small fraction of the market, with adoption constrained by the complexity of annuities and the need for enhanced participant education.\n\nThis collaboration reflects the evolving landscape of retirement planning, emphasizing the importance of guaranteed lifetime income within employer-sponsored retirement plans. Vanguard and TIAA’s combined scale and expertise position them to influence the future of retirement income offerings. Further product details and availability updates are expected throughout 2026.