Annuities in 401(k)s rise: most savers still avoid them

Most Americans saving through workplace plans now expect retirement to be less secure than it was for their parents, a shift that is reshaping how employers and asset managers talk about pensions and 401(k) design. New survey data and recent regulatory moves are pushing annuity-style solutions into retirement accounts — but important questions about cost, transparency and suitability remain.

Worries on the rise: what the new poll found

A BlackRock-commissioned survey of 1,312 workplace savers, conducted April 15–May 16 by research firm Escalent, shows growing anxiety about retirement income. Roughly three in four participants — about 76% — said they expect less retirement income certainty than previous generations, up from 67% in 2021.

Interest in plan features that deliver ongoing payouts also appears strong. That matters because several large asset managers are now adding annuity-style options to employer plans, aiming to turn a portion of retirement savings into predictable lifetime income.

Annuities remain a tiny slice of 401(k) assets

Even as attention grows, annuity options inside workplace savings are still rare. These products are most commonly folded into target-date funds, which automatically shift a portfolio toward more conservative investments as a saver nears retirement.

Structures vary: some plans let older participants convert a lump sum into a guaranteed monthly payment via an insurance contract, while others provide mechanisms to withdraw a fixed percentage annually for life.

Measured growth is visible but small. Morningstar reports that assets in target-date strategies that include annuities rose to about $44 billion at the end of March 2026, up from $25 billion a year earlier — yet that represents under 1% of the roughly $4.8 trillion held in target-date funds at the end of 2025.

The Plan Sponsor Council of America recently found only 5% of employers currently offer target-date funds with an annuity layer, while 15% are considering it.

Policy and market moves are nudging plans

Two developments could accelerate adoption. The U.S. Department of Labor has proposed rules aimed at making it easier for employers to add alternatives — including lifetime income strategies — to 401(k), 403(b) and other defined contribution plans. Separately, bipartisan legislation named the Retirement Simplification and Clarity Act would ease rollovers of 401(k) balances into qualified annuities.

Asset managers and plan providers are already responding: firms such as BlackRock, JPMorgan Asset Management, Fidelity, Vanguard and TIAA are expanding annuity-style options inside retirement accounts.

Why some experts urge caution

Not all observers view the shift as an unalloyed improvement. Critics say recent regulatory guidance focuses on reducing sponsor liability rather than strengthening investor protections or raising standards for complex investments.

Financial advisers who counsel plan participants often flag three recurring concerns about annuities in workplace plans: cost, reduced liquidity, and product complexity. Even when annuity solutions are embedded in a target-date fund — potentially smoothing some issues — the design differences matter a lot.

Industry voices emphasize the importance of clarity. Investors should know whether a product actually guarantees lifetime payments, whether those payments keep pace with inflation, and what fees will be charged over time.

Gender gap in attitudes and adoption

The survey also highlights a notable gender dynamic: women report higher concern about outliving their savings and greater interest in retirement income features, yet they are less likely than men to choose guaranteed-income products. Experts point to longevity differences as a key reason why many women could benefit from lifetime-income options, even as they hesitate to adopt them.

What savers should watch now

• Confirm the benefit type: Is the payout truly lifetime or is it a time-limited withdrawal schedule?
• Check inflation protection: Determine whether payments are fixed or indexed to inflation.
• Understand fees and trade-offs: Compare the cost of embedded guarantees against liquidity and investment flexibility.
• Ask about portability: Find out whether an annuity can be rolled to another plan or cashed out at reasonable terms.
• Seek advice for complex choices: Consider talking with a financial professional before committing a significant portion of savings.

As annuity options slowly move from niche to more common, the choices plan sponsors make — and the disclosures given to participants — will determine whether these products ease retirement risk or simply shift it. For savers, the near-term task is straightforward: demand clearer information and evaluate how any guarantee fits into your broader retirement plan.