Creating a dependable stream of retirement income is an important element of a person’s financial strategy. A retirement industry giant claims it now has a new product for its retirees to meet this crucial challenge.
Fidelity’s New Product
Fidelity said its Guaranteed Income Direct will let employers offer an instant income annuity to workers through an insurer that they can choose themselves. Fidelity will offer the digital tools through the employee benefit portal to help workers decide what the right amount of guaranteed income is for them, Fidelity stated in a media release announcing the new product.
Those who participate in the plan will have the ability to change any amount of their retirement savings into an income that will act like a “personal pension,” the firm said. People can convert their savings over regardless of whether it will be allocated to individual stocks, mutual funds or other assets.
Any money that isn’t converted into an annuity could stay in the workplace savings plan.
“Making the Shift from saving for your retirement to living in retirement is a big transition, and one of the main challenges people face during this transition is how they are going to make sure they have enough income to pay for their essential bills,” Keri Dogan, senior member of retirement solutions at Fidelity, stated in the media release.
Fidelity claims the product will be made available for certain clients in the first half of next year before becoming available to more clients in the second half of the year.
Retirement Plan Annuities: A Growing Trend
Fidelity is the newest financial services business to add an income option to its retirement plans.
BlackRock, the biggest asset manager in the world, has put in a target date strategy that’s called LifePath Paycheck that lets retirement plan members purchase a lifetime income stream by using their retirement savings.
This increase of annuities involving retirement plans is made possible because of the SECURE Act, which is a comprehensive retirement bill that was signed into law in 2019. This law makes it easier for plan sponsors to incorporate annuities into their retirement plans by defining the types of ways in which a sponsor could satisfy their financial obligations when providing streams of guaranteed annuity to participants.
Author: Scott Dowdy