Edelman Introduces Retirement Income Product

Edelman Financial Engines has launched an in-plan retirement income product for 401(k) retirement plan participants called Income Beyond Retirement.

Designed for participants who are in or near retirement, plan sponsors can use the retirement income product to assist participants with how to decumulate assets saved over their career.

Edelman Financial Engines, a wealth planner and investment advisory firm, has been working with plan sponsors for 20 years. It developed the product in response to the difficult decisions employees face at the decumulation stage, explains Stephen Rubino, senior vice president of workplace at Edelman.  

“One of the most difficult parts of retirement is the decumulation stage and navigating how to turn your savings into income that will last throughout your retirement,” he says. “Goals, dreams, preference and risk tolerance vary widely from person to person, so they need a solution that is highly personalized.”

Income Beyond Retirement aims to match the personal needs and situations of individual plan participants by combining portfolio management and analysis with the support of a financial adviser to create personalized, flexible retirement income plans and investing strategies, according to a company press release. Several plan sponsors—including Boeing, Equifax, Lenovo, Milliken and Prime Therapeutics—are already offering it to participants, the release notes.

Retirement income products are receiving greater attention from plan sponsors, as employers begin to treat retirement plans as not only investment vehicles for accumulating retirement savings.

Dimitra Hannon, senior director of global financial benefits and well-being at Boeing, said in a statement that the plan sponsor offers IBR to provide participants with retirement innovations.

“People need and want more hand-holding in the process,” Rubino adds. “For many, entering retirement can be a high-anxiety time of life, no matter your financial situation, and we found employees want someone to talk to about their unique situation.”

The product is designed to provide 401(k) participants approaching retirement “with a personalized and flexible retirement spending and income strategy,” Rubino says.  

Because participants’ retirement income needs and circumstances are different—based on differing demands for spending, health care costs and family needs—participants will decumulate their 401(k)s in different ways.

“Some participants will rely on their 401(k) balances to generate a steady income while others may aspire for more growth, whether for discretionary expenses or bequests,” the company release states.

Additionally, the near-retiree population is highly diverse and each situation is different, says Rubino.

He adds, “From portfolio objectives to drawdown needs, near-retirees want to implement a personalized strategy that meets all the nuances of their lives and is tailored to their household … They want more options that are not lock-ins, that give them the ability to make changes as life changes. Near-retirees want more flexibility.”

IBR offers near-retiree participants age 55 and older a complimentary retirement checkup with an adviser. Working with an adviser, participants can develop a retirement income plan that addresses the complexity of retirement by incorporating important decisions such as claiming Social Security and evaluating income and growth preferences, the company release states.

IBR’s online suite includes:  

• An assessment tool for after-tax spending;
• Income planning and scenario analysis to help participants with their own plans to manage risks associated with market uncertainty, sequence of returns risk, interest rates, inflation and longevity risk;
• Custom portfolio strategies tied to participants’ goals for income, asset growth or combined objectives; and
• An integrated view, including optimized Social Security claiming strategies, in-retirement income sources and withdrawals generated from all household accounts that include tax-deferred and taxable accounts.