A new study from the TIAA Institute and Nuveen finds that tens of millions of U.S. workers are approaching retirement without a coherent strategy for turning their 401(k) balances into a dependable income stream. The survey, which polled more than 2,100 participants across all career stages, highlights a critical gap between accumulation and decumulation planning.
While 71% of respondents said they think at least somewhat about how they will draw down their savings, only 22% have given the matter serious consideration. On a basic quiz about withdrawal mechanics, workers answered correctly on just 25% of questions on average. Nearly half could not answer a single question correctly.
Longevity literacy is a compounding factor. Only one-third of participants could accurately estimate how long people typically live after reaching age 65, and 44% underestimated life expectancy. Workers who plan for a shorter retirement than they are likely to experience face a significantly elevated risk of outliving their assets.
“What stands out to me in this research is the connection between longevity literacy and lifetime income planning,” said Surya Kolluri, head of the TIAA Institute. “Nearly half of 401(k) employees underestimate how long they’re likely to live after age 65, and that misperception directly undermines their ability to plan for sustainable income.”
The report also underscores that workers want more than generic guidance. A full 94% said it is important for employers to provide resources to help navigate withdrawal decisions, and 49% consider it the employer’s actual responsibility. When such resources are available, confidence improves markedly: 53% of employees who used both interactive and non-interactive planning tools said they were very confident about choosing the right withdrawal approach, compared with just 28% among those who used neither.
Brendan McCarthy, head of Nuveen Retirement Investing, noted the scale of the challenge. “With more than $8 trillion in assets spread across 725,000 plans serving 80 million active employees, 401(k) plans are the primary employer-provided retirement savings vehicle in the private sector,” he said. “Yet despite that scale, too many Americans arrive at retirement without a clear strategy for turning their savings into income that will last.”
McCarthy pointed to employer action as the key lever. “When employers invest in the right combination of interactive and educational tools, and pair them with smart plan design, including lifetime income solutions embedded in target date funds, employee confidence improves dramatically,” he said. “The opportunity is clear, and the solutions exist.”
The findings echo other recent research. For instance, a AmeriLife survey found that only 47% of peak-earning Americans feel on track for retirement, while a BlackRock survey showed that 68% of workers feel on track, but savings replace only half of expected income.
Nuveen offers a range of tools and investment options designed to address the problem, including target-date funds embedded with TIAA guaranteed income. The TIAA Institute plans to extend the research to nonprofit sector defined contribution plan employees later this year.
