By Randy Myers
The retirement industry is pouring energy into developing lifetime-income solutions, but product development alone may not be enough to win them a place in defined contribution (DC) retirement plans, says Christopher Bailey, a director and researcher in the retirement practice at Cerulli Associates.
Speaking at the 2026 Stable Value Investment Association Spring Seminar, Bailey said the challenge facing the retirement industry is not simply creating more retirement-income solutions. Rather, it is making sure those solutions align with what participants want and with what consultants, advisors, and plan sponsors are prepared to recommend and implement.
So far, that’s been an uphill battle. Only about 4% of plans currently offer a purpose-built retirement-income product.
To be fair, Bailey acknowledged, the retirement-income market is still in its early stages, with many of the products being introduced facing both practical and perceptual barriers before they can gain broader traction. He also noted that plan sponsors are not always quick to change their investment menus.
“We’re only a handful of years into this retirement income journey with new forms and solutions coming out every day,” he said. “I expect this to pick up. And I do see some green shoots in and among the advisors and consultants we speak to. They want to put these things in front of their plan sponsors, but they’re not quite there yet. They’re saying the products are complex, they’re too costly, the fees aren’t transparent, and they’re not portable.”
To chart a way forward, Bailey advises the industry to think about retirement income not as a product or feature, but as the outcome of the entire retirement system—from asset accumulation and retirement planning to participant decision-making and support from providers, advisors, and employers. Just as important, he said, the industry must present its offerings in terms that resonate with plan sponsors, participants, and their advisors.
For now, Bailey said, asset managers are focusing much of their effort on fitting income solutions into the qualified default investment alternative (QDIA) space, still the most valuable real estate in a DC plan lineup. Their top strategic priorities include co-manufactured target-date funds, target-date funds with guaranteed income, and custom target-date funds. A smaller but still meaningful share of managers also identify retiree-focused equity products, personalized target-date funds, and managed-payout funds as priorities, while relatively few cite stand-alone annuity products.
That focus reflects the dominance of target-date funds in DC plans, but it also creates a challenge. Sponsors tend to change their QDIAs slowly. Only about 5% do so in a given year, in part because they are wary of litigation and hesitant to make sweeping changes for broad participant populations.
Recordkeepers are investing in the retirement-income arena as well. Bailey said many are prioritizing support for guaranteed-income solutions, which can include building the platform capabilities needed to accommodate new products and making it easier for retirees to take distributions from plans in the ways they prefer.
Even within the small 4% slice of plans offering a purpose-built retirement-income product, adoption patterns vary. Retiree-focused equity strategies appear to be gaining some traction among advisor and aggregator firms serving small and midsize plans, Bailey said, while larger plans and institutional consultants appear more interested in annuity platforms. Target-date solutions with a guarantee or annuitization component remain rare, as do out-of-plan annuity platforms, stand-alone in-plan annuities, and managed-payout funds.
In the consultant community, enthusiasm for retirement-income products remains limited. Relatively few consultants say they are likely to recommend most retirement-income solutions today, whether those are managed-payout funds, in-plan annuities, out-of-plan annuities, retiree-focused equity products, or target-date offerings with guarantees. While concerns about complexity, cost, fee transparency, and portability may in some cases be more a matter of perception than reality, Bailey said, perceptions still matter. If consultants and advisors view the category as complicated, expensive, and difficult for participants to carry with them when they change employers, adoption will remain slow no matter how much effort product providers put into innovation.
Accordingly, Bailey said education may be more important right now than product proliferation. Cerulli’s research indicates manufacturers and recordkeepers need to keep educating advisor home offices, consultants, field advisors, and plan sponsors on how new income offerings work, what problems they are meant to solve, and which participant groups may benefit most. Expanding product choice on recordkeeping platforms also could help by giving consultants and advisors something to evaluate and compare rather than forcing an all-or-nothing decision around a single option.
In crafting those education efforts, Bailey said, it will be important to understand—and align with—the participant mindset. Cerulli’s research shows that workers’ top priorities are not framed in product language. Rather, they say they care most about saving for retirement, maintaining a good quality of life, and achieving financial peace of mind. Those goals are personal and emotional, not technical. Bailey argued that if providers speak only in terms of product architecture and guarantees, they may miss the very concerns participants are trying to address.
That emotional dimension appears to intensify as retirement approaches. Bailey said confidence in maintaining one’s standard of living in retirement declines among older cohorts, with about half of Gen Xers and baby boomers not confident they will be able to do so.
While participants want help with retirement income, many do not want to surrender complete control. They also want plans tailored to their own lives. Gen X and baby boomer respondents say they value the ability to withdraw money when they want, the possibility of continued growth after retirement begins, and guarantees that can provide monthly payments if assets run out. At the same time, they show limited interest in putting everything into a single, all-purpose product.
That preference for flexibility shaped Bailey’s comments about defaulting participants into retirement-income solutions. While the industry has focused much of its attention on embedding income features into target-date funds, he noted that consultants and advisors are “not psyched” about the idea, preferring that participants be given the opportunity to opt into such products. He also said many participants want a say in whether some of their portfolio is allocated to a fixed-income or guaranteed-income solution.
Ultimately, Bailey suggested, plans may need multiple retirement-income approaches for different participant segments—a default-oriented solution for some, and other options for those who want flexibility, advisor involvement, or a different balance between growth, liquidity, and guarantees.
In response to a question at the end of his session, Bailey also suggested that stable value could benefit from participants’ desire for control and aversion to risk.
“Participants aren’t particularly risk-on,” he said. “They’re very risk averse. So, the idea of investing in a stable value option, and getting a guaranteed return, or stable return, is very appealing to them. They understand the value proposition.”