Like any target-date fund, it will combine stocks and bonds, shifting to a more-conservative mix as investors age. But it will also give older workers the option of moving some of their 401(k) savings into an annuity, an insurance contract that converts an upfront lump-sum payment into fixed monthly payments for life. The move suggests that annuities embedded in diversified 401(k) investments are slowly moving into the mainstream.
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Vanguard joins push to offer 401(k)s with a regular payout
Investors can’t change their minds once the annuity’s lifetime income has begun. They can elect to continue the income over a spouse’s lifetime and add a death benefit for other heirs. The annuity isn’t inflation-adjusted, though TIAA has historically provided profit-sharing payments in some years.
