Retirement plan sponsors and recordkeepers will need to offer more than a single investment product to satisfy the complex income needs of pre-retirees, according to new research from Cerulli Associates. The firm's U.S. Defined Contribution Distribution 2026 report, released Tuesday, found that a majority of pre-retirees are uncomfortable making key retirement income decisions without professional guidance.
The survey, which polled 1,200 DC plan participants and 150 recordkeepers, revealed that 46% of pre-retirees want the ability to withdraw money at any time, while 39% desire a guaranteed monthly payment that continues even after their savings are depleted. Additionally, 40% seek a personalized, detailed, and actionable retirement plan, and 31% want the flexibility to change their investments as circumstances evolve.
These findings underscore the need for the industry to combine investment solutions with participant advice and planning, as well as education for plan sponsors and intermediaries, and robust recordkeeper infrastructure, Cerulli said. The firm also noted that DC industry consultants believe the average retirement plan may need two or three different income options on its menu to accommodate the diverse needs of participants.
“Given the high degree of personalization that goes into developing and executing on a retirement income strategy, meeting the needs of all, or even most, participants with a single retirement income solution is challenging,” said Chris Bailey, director at Cerulli, in a statement. “Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help. As much as they want guaranteed income in retirement, pre-retirees also want a personalized, detailed plan they can follow in retirement.”
The research arrives as retirement assets hit $51.2 trillion, but advisors are increasingly shifting their focus from accumulation to spending strategies. The demand for flexibility and security among pre-retirees reflects a broader trend in the industry, where 86% of older Americans fear spending down their savings, according to a recent Prudential survey.
Recordkeepers are responding to this pressure. Nearly three-quarters (70%) of recordkeepers surveyed said that providing support for guaranteed income solutions and improving retiree distribution options are top priorities for their organizations. This infrastructure is critical, as it enables participants to access and manage retirement income products effectively.
Bailey emphasized the opportunity for recordkeepers and plan advisors to help participants develop retirement plans that utilize these products effectively. “Perhaps increased access to planning and advice will reduce the need for flexibility that intermediaries and participants seek,” he added.
The findings also echo concerns about the broader retirement system. A separate Athene survey found that Gen X and millennials view the retirement system as outdated, suggesting that younger cohorts may demand even more innovative solutions. As the industry grapples with these challenges, the Cerulli report serves as a call to action for plan sponsors, advisors, and recordkeepers to build a more holistic retirement income ecosystem.
