Millions of 401(k) savers face the same unsettling question as they approach retirement: How do you turn a lump sum into income you will not outlive?An emerging class of retirement products promises to solve that problem by embedding annuity contracts directly inside the target-date funds your 401(k) already offers.The money flowing into these hybrid funds has surged, yet only a fraction of employers have added them to their plan menus. Annuity-enhanced target-date funds nearly double but stay below 1% of the marketTarget-date strategies with an annuity component held $44 billion in assets at the end of the first quarter of 2026, according to Morningstar’s research paper, Guaranteed Income in DC Plans: Evaluating Target-Date Funds with Built-In Annuities.Jason Kephart, senior principal of multi-asset strategy ratings at Morningstar, said retirement annuity decisions demand participant education beyond traditional set-and-forget target-date funds, InvestmentNews reported.The reason target-date funds have been so successful in helping people is that it’s like an ‘easy button.’ “When you’re in retirement, now you have to make decisions,” Kephart added. “That’s where I think the education has to come in.”That figure was up roughly 70% from $25 billion a year earlier, but it still represents less than 1% of the $4.8 trillion target-date universe. Another survey from the Plan Sponsor Council of America found that just 5% of respondents offer a target-date fund with an annuity, while 15% said they were considering it.Those numbers reveal a market where asset growth has outpaced actual plan adoption, leaving the majority of retirement savers without in-plan access to guaranteed income.BlackRock survey reveals workers’ widening retirement income anxietyAbout 76% of workplace savers believe their generation will have less certainty about retirement income than previous generations, BlackRock’s 2026 Read on Retirement report found.That share has climbed steadily from 67% in 2021, reaching a survey-series high among the 1,312 workplace savers polled this spring. Nearly two-thirds (64%) of respondents said they worry about outliving their savings, and the report found participants showed broad demand for guaranteed income, active management, and tailored guidance, according to BlackRock.More Retirement:Vanguard drops playbook on retirement incomeVanguard warns workers losing thousands in 401(k)sFidelity’s wake-up call on Social Security, IRAs, and 401(k)s“Confidence is growing, but for too many Americans, retirement reality won’t match retirement expectations,” said Jaime Magyera, head of retirement and U.S. wealth advisory at BlackRock, according to CNBC.Women face a particularly stark gap, being 44% less likely than men to adopt guaranteed income solutions despite living longer and facing greater outliving risk, the survey found.“They’re living longer. Of anyone who would really need that lifetime income, it would be women, yet they’re not asking,” Magyera explained.
BlackRock survey finds growing retirement income anxiety as more workers fear outliving savings and facing greater financial uncertainty.millann/Getty Images
Complexity and fiduciary caution keep plan sponsors on the sidelinesEmployer hesitancy is driven not by disinterest, but by structural and legal concerns that have lingered since the first discussions about embedding insurance products inside retirement plans.“They say it takes three times to explain it to me. As a financial advisor, how am I going to explain it to the plan sponsor?” said Kent Peterson, senior vice president for institutional retirement at Securian Financial Group, at a LIMRA conference panel, Insurance Newsnet reported.Eileen Appelbaum, a senior economist and co-director at the Center for Economic and Policy Research, offered a more critical view of the regulatory approach.“The guidance from the Department of Labor is all about how to reduce your liability in case your workers try to sue you. It’s not about improving guardrails,” Appelbaum warned, according to CNBC.New federal rules, bipartisan legislation could accelerate 401(k) annuity adoptionThe Department of Labor proposed a rule on March 30 that creates a process-based safe harbor for fiduciaries selecting plan investments, including lifetime income strategies, within 401(k) plans.A bipartisan bill called the Retirement Simplification and Clarity Act would allow workers aged 50 and older to roll over 401(k) assets into a qualified annuity while still employed.“2026 will mark a significant period when plan sponsors move from exploration to execution,” predicted Kevin Crain, executive director of the Institutional Retirement Income Council, 401k Specialist noted.BlackRock, Vanguard, Fidelity, JPMorgan Asset Management, and TIAA are all expanding annuity-style target-date products as they compete for early positioning in a nascent market.BlackRock’s LifePath Paycheck strategy alone grew from $9 billion to more than $25 billion in assets between mid-2024 and late 2025, Morningstar data showed.Ellevest CEO Sylvia Kwan told CNBC that investors face wide variation across products, ranging from whether lifetime income is offered to whether monthly payments are fixed or inflation-adjusted.Related: What to Know about Including Annuities in Your 401k