BlackRock, Equitable product offers retirement security, predictable ‘paycheck’

Asset manager BlackRock has announced the availability of LifePath Paycheck, a product created in collaboration with life insurance and financial services company, Equitable. With the goal of providing additional security for retiring Americans, LifePath Paycheck offers “guaranteed income” via a target date fund.

When a participant enters retirement, they will receive a guaranteed amount of funds in a paycheck-like manner that is meant to provide a stable source of income. By providing access to guaranteed income through a target date fund, LifePath Paycheck is meant to be moremore stable than a standard 401(k).

The collaboration was forged out of careful vetting by BlackRock, which had been working on the concept behind the new program for several years. Keith Namiot, head of Institutional Markets at Equitable, stated that “Equitable is one of the leaders in innovation and development in the [retirement income] industry” and further emphasized the principles behind Equitable’s approach to risk management as a key factor in BlackRock’s decision to work with them on LifePath Paycheck.

First available for access when the individual reaches 59½, this option creates a predictable income for people who are currently planning their retirement. When combined with other options such as Social Security, LifePath Paycheck is intended to assuage many worries for retirees and financial planners.

Solving the 'significant retirement gap'

Namiot describes LifePath Paycheck as a tool to help solve the “significant retirement gap” facing American workers. With the growing concern of many Americans regarding their long-term financial stability in their retirement, there has been an increased demand for more stable and less risky options.

BlackRock intends for this product to be fully accessible to participants and has created a website, MyLifePath™ that includes the ability to check one’s balanceand current allocations, as well as how their contributions will translate into income in retirement.

Starting at age 55, approximately 10% of a participant’s balance will be put into lifetime income units that are issued by Equitable. This percentage will increase as they approach retirement, rising to nearly 30% by the time they reach age 65. Rather than being mostly invested in bonds as the participant ages, they will gradually invest a portion of their assets into the guarantee. A participant is not required to exercise their guaranteed income at this point, but they must do so by the time they are 72, or else the guarantee is no longer valid.

Product not intended as replacement

Namiot stresses that LifePath Paycheck was not intended to replace or lessen the value of other retirement options but is simply another tool in the arsenal of financial advisors for fulfilling their financial duties for their clients. It is intended to compliment other traditional methods of retirement saving, such as an IRA or a pension.

One aim of LifePath Paycheck is to eliminate the anxiety over outliving one’s assets, a concern of many retiring Americans. “We believe that this is a critical way for workers to obtain a longer and more fulfilling retirement,” says Namiot.

 

Devin Wilhelm has a master's degree in professional writing and is based out of Hershey, Pa. His main beats are fintech, corporate finance and market research.  Contact him at devin.wilhelm@innfeedback.com.

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