Dec. 3 at 8:27 PM
Vanguard is developing new target-date funds for employer retirement plans that include an option to buy a lifetime annuity. The Target Retirement Lifetime Income Trusts will integrate TIAA’s Secure Income Account, which can represent up to about 25% of the portfolio, with the rest in stocks and bonds. Investors can choose to convert some or all of their SIA holdings into an annuity at retirement.
The move follows growing industry efforts to provide predictable income as pensions decline and retirees rely more on 401(k) plans. Vanguard is a major target-date fund provider, controlling over a third of the category's
$4 trillion in assets. Morningstar says annuity features may improve payout stability and reduce exposure to market downturns early in retirement. BlackRock has also seen growth in similar offerings, though adoption remains limited.
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