Young workers on 401(k) offerings: We want sure things

Employees in their 20s may have decades of investing ahead, but right now they're craving access to guaranteed income through their 401(k) plans. Fully 95% of workers under 30 who don't have access to a guaranteed income option at work said that they'd like to be able to do so, according to a poll of 2,500 people by The Hartford Financial Services Group Inc. Those numbers remained high for individuals in their 30s and 40s, too. About nine of 10 individuals in both age cohorts said that they would like to turn some portion of their retirement savings into guaranteed income, according to The Hartford. That sentiment seemed to diminish somewhat among the oldest individual surveyed, as only 77% of those over 60 sought guaranteed income via their workplace retirement plans. The large numbers of young people seeking lifetime income seems to be tied to their attitudes toward Social Security and the realization that a traditional defined-benefit plan is a thing of the past, said Patricia Harris, assistant vice president of product management for The Hartford's retirement plans group. “We're finding very broad appeal [on in-plan lifetime income] across all age groups, but strong appeal at the youngest ages,” she said. “I think having guaranteed income as a portion of the 401(k) portfolio is here to stay, and we see it as more of an asset class, as there is more reliance on the 401(k).” Ms. Harris added that after a recent meeting with university students showed that college-age kids are intrigued by having pension-like guaranteed income options. Many are convinced that Social Security would no longer be around by the time they needed it. Though the youngest cohorts are more interested in in-plan lifetime income, they shouldn't necessarily throw all their money into guaranteed lifetime income products. These workers have the longest time horizons and ought to take advantage of some market risk to up their returns. “This [lifetime income option] is only part of a whole diversification strategy; it's not something you look at without weighing all the other options in a plan's offering,” Ms. Harris said. The amount of risk an employee should take in his or her retirement plan “depends on the person, and you need good tools to look at different investment mixes over time,” she added.