1 in 5 people exhaust their lump sum DC pay-out in 4.5 years. What you can do to not be one of them.

A Growing Retirement Regret
With pensions less common in the workplace, retirees are increasingly looking to annuities, financial products that offer a guaranteed income stream for life, to provide financial security through their retirement. In 2022, 13% of people who took a lump-sum from their defined contribution (DC) plan, like a 401(k) or 403 (b), wished they took guaranteed annuity payments. That number jumped to 46% in 2026.
50% of retirees and more than 60% of pre-retirees admitted they were concerned about:
- Underestimating the amount of money needed to save for retirement.
- Overestimating how long their retirement savings would last.
- Underestimating how long they would live.
The hardest part of planning for retirement is turning savings into a paycheck that lasts. For many, choosing between a lump-sum or an annuity from their defined contribution plan can be an important factor.
Annuities vs. Lump-Sums
Retirees who elected guaranteed annuity payments report high levels of satisfaction and confidence.
What people who chose annuities are saying:
- 94% agreed that receiving regular monthly annuity payments that are guaranteed for life from their former employer’s DC plan makes them feel financially secure.
- 90% said they feel better off financially receiving regular monthly annuity payments rather than with a lump-sum.
What people with lump-sums are saying:
- 51% said they are concerned that remaining money from their DC plan will run out, compared to 30% in 2017.
- 61% who made a major purchase in their first year said they regret spending part of their DC plan, up from 33% in 2017.
What prompts people to choose a lump-sum vs an annuity?
Most lump-sum recipients whose employer offered an annuity felt it would give them access to a larger amount of money at one time and greater control over their finances. At the same time, 89% of retirees who received an annuity said it allowed for greater flexibility for potentially more aggressive strategies with their other investments.
For many, their parents’ experiences in retirement played a role. 6/10 retirees who took the annuity had at least one parent who received a retirement income from a pension plan compared with 35% of those who took the lump sum.
The Future of Retirement
7/10 pre-retirees think their employer should be required to provide an annuity option (partial or full) that they cannot outlive, compared to 53% in 2022.
Living longer makes a steady retirement paycheck more important now than ever. That’s why we support efforts that expand access to retirement savings options and help Americans plan for lifetime income in retirement.
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