Exploring Retirement Income: Growing Interest in Annuities Among Retirees
A recent survey by BlackRock, in collaboration with research firm Escalent, reveals that a significant portion of American retirees are more concerned about their financial security compared to previous generations. The survey, conducted with 1,312 workplace savers between April and May, found that 76% of respondents believe their retirement income prospects are less certain than those of earlier generations, up from 67% in 2021.
Interest is growing among survey participants in retirement plan features that offer income during retirement, such as annuity products within 401(k)s. Asset manager BlackRock is one provider of these solutions. The survey highlights that women, in particular, worry about the longevity of their savings and generating retirement income. However, they are reportedly less inclined to choose guaranteed income options like annuities despite typically living longer. Jaime Magyera, head of retirement and U.S. wealth advisory at BlackRock, emphasizes the contradiction and the importance of lifetime income for women.
Annuity options, currently available in a limited number of employer-sponsored retirement plans, are often part of target-date funds. These funds adjust asset allocation to become more conservative as retirement nears. Annuity structures within these funds typically provide workers the option to purchase a contract that turns a lump sum into lifelong monthly payments or allows annual withdrawals of a savings percentage.
Data from the Plan Sponsor Council of America shows that 5% of plan sponsors offer a target-date fund with an annuity component, while 15% are considering implementing such options. As of March 2026, annuity-inclusive target-date strategies amassed $44 billion in assets, up from $25 billion the previous year, yet still represent a small portion of the over $4.8 trillion in target-date funds by the end of 2025. According to Morningstar, there is potential for growth in annuity adoption within these funds, despite their currently limited presence.
The regulatory landscape is also changing, with a recent proposal from the Department of Labor aiming to facilitate the inclusion of alternative assets like annuities in retirement plans such as 401(k)s and 403(b)s. The Retirement Simplification and Clarity Act seeks to enable workers to transfer 401(k) assets into qualified annuities. Prominent financial organizations, including BlackRock, JP Morgan Asset Management, Fidelity, Vanguard, and TIAA, are actively expanding annuity options in retirement portfolios.
Despite the growing interest, skepticism remains about integrating annuities into workplace plans due to concerns about costs, liquidity, and complexity. Eileen Appelbaum from the Center for Economic and Policy Research suggests regulatory guidance may focus more on limiting employer liability than raising standards for risk management. Financial advisors stress the importance of understanding annuity features, such as income availability, payment type, and fees. Silvia Kwan, CEO of Ellevest, underscores the necessity of professional financial advice to navigate the suitability and type of annuities within retirement strategies.