Are you worried about outliving your retirement savings? BlackRock, the largest asset manager, has launched a new product called LifePath Paycheck to help workers turn their retirement savings into a regular income stream that mimics their paycheck during their working years.
This innovative strategy provides guaranteed income through a target-date fund, which adjusts its investments as the investor nears retirement age. Employees who opt-in through their employer’s retirement plan can begin making allocations to lifetime income starting at age 55, with regular withdrawals starting at age 59½.
While this product is currently only available through employer plans, there is hope that it will eventually be offered to individuals without access to employer plans. BlackRock’s CEO, Larry Fink, predicts that this strategy will become the most common investment choice in defined contribution plans.
The success of this strategy depends on employee participation. Companies like Avangrid are already implementing LifePath Paycheck to attract and retain employees by providing them with a sense of security similar to a legacy pension plan. Annuity options in retirement plans are expected to become as popular as target-date funds, helping retirees manage their income and absorb investment risks.
Not only does having annuity income help retirees understand how much they can spend, but it also enables them to delay claiming Social Security benefits. By creating an income bridge, retirees can potentially increase their Social Security benefits by up to 8% for every year that they delay claiming.
If you’re looking to make the most of your retirement income, consider exploring options like LifePath Paycheck to ensure a steady stream of income during your retirement years. Stay tuned for more updates on retirement strategies from Extreme Investor Network!
