Vanguard and TIAA Launch Guaranteed Lifetime Income Target-Date Funds

Vanguard and TIAA have announced a strategic collaboration to introduce an innovative retirement income solution aimed at providing retirees with a guaranteed lifetime income stream. Vanguard's new Target Retirement Lifetime Income Trusts series will incorporate the TIAA Secure Income Account, an annuity product designed to secure lifetime income. This development marks Vanguard's first new target-date series since 2003 and expands guaranteed income access through employer-sponsored plans, reflecting a growing market trend. The partnership leverages both Vanguard's investment management expertise and TIAA's stability in annuity solutions to offer plan sponsors a low-cost, secure retirement income option. This initiative aligns with increased demand for guaranteed income within 401(k) plans, driven by legislative changes such as the SECURE Acts that facilitate annuity inclusion in defined contribution plans. Market data indicates significant growth in target-date funds with annuity components, escalating from $9 billion in 2019 to an anticipated $100 billion by mid-2025. Survey insights reveal that over 90% of 401(k) participants, including a majority of Gen Z and Millennials, prioritize having guaranteed lifetime income options through their employer-sponsored plans. Early market success stories, such as BlackRock’s LifePath Paycheck fund, demonstrate rising acceptance and adoption. Industry experts anticipate a similar adoption curve to that observed with target-date funds, which experienced exponential growth following legislative support. The collaboration is positioned as a response to long-standing demand for income security in American retirement planning, particularly as social security benefits face increasing scrutiny for adequacy and sustainability. The Vanguard Target Retirement Lifetime Income Trusts are expected to be available for plan mapping in the second half of 2026, with additional details on product design and availability forthcoming throughout the year. This initiative reflects a broader paradigm shift in retirement income solutions, emphasizing security, longevity, and evolving participant preferences.