National Retirement Security Month
October 2020

NAGDCA Tip #2:
Retirement Income: The Flip Side of Retirement Preparedness

Lexington, KY, September 30, 2020—Employees are increasingly concerned about translating retirement savings into income that will sustain them through their post-work lives. National Retirement Security Month, originally conceived as National Retirement Security Week by NAGDCA in 2006, asks employers to make every effort to help Americans take the steps necessary to adequately prepare for their financial security in retirement. NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans.

“Messaging about the importance of saving for retirement has grown louder and more prevalent over the last several decades. As a result, many have heeded the call and amassed significant savings in their employer’s defined contribution plans,” stated NAGDCA Executive Director Matt Petersen. “Now, as the huge boomer population makes its way into retirement, employees are turning their attention to how to transform their savings into income to augment traditional sources such as Social Security and pensions. Fortunately, plan sponsors are increasingly turning their attention to providing employees with the guidance and tools they need to accomplish this ‘flip side’ of retirement preparedness.”

Results from BlackRock’s DC Pulse 2019 attest to employees’ growing interest in receiving guidance and options for addressing retirement income in retirement:

  • 62% have difficulty understanding how retirement savings will translate into monthly retirement income (vs. 51% in 2018)
  • 55% aren’t sure how to calculate spending in retirement (vs. 55% in 2018)
  • 62% are worried about generating retirement income on their own (vs. 48% in 2019)

And to plan sponsors’ response:

  • 67% offer retirement income planning tools (vs. 51% in 2018)

According to guidance culled from NAGDCA members, plan sponsors need to, first and foremost, actively market guidance and the tools they offer. Specifically, they need to provide educational programs to help employees understand the following:

  • Replacement Income – The general rule of thumb is 80% of current income, which assumes no debt and a resulting lower cost of living.
  • Income Sources – What’s available from traditional income streams (e.g., Social Security, pension plans); this is especially important for public sector plans, given the variability of offerings. What’s available from supplemental sources, such as employer-sponsored defined contribution plans and personal savings.
  • Expenses – Working with budgeting tools, and an employer-provided or personal financial planner, 1) establish a budget that enables maximum accumulation and growth of current savings and 2) discover how much is needed to cover all essential expenses and craft a satisfying retirement (i.e., factor in non-essentials such as travel, vacation home, boat, RV, etc.). Run scenarios of monthly draw amounts, factoring in inflation and interest, to calculate the income needed to sustain over projected lifespans.
  • DC Distribution Options – Identify what’s available and determine which best suits individual needs. Among standard options are monthly withdrawals of predetermined amount, transition to an annuity, ad hoc distributions, and, in some cases, complete withdrawal or rollout from an employer plan. If able, it may be beneficial for participants to leave their retirement savings in their employer-sponsored plan and have it continued to be managed for them, with the knowledge and security plan sponsor fiduciary oversight provides.

“Retirement preparedness doesn’t cease with the end of our working lives. Helping employees translate earnings and savings into income in their post-work years is just as essential as helping them understand the benefits and limitations of traditional income sources, and the resulting need to actively save to achieve a financially secure retirement,” concluded Matt.

Additional NAGDCA-provided resources on retirement income include:

Retirement Income: Funding the Encore
Monday, October 19 – 2:00-3:00pm ET
This presentation is one of four general sessions during Connect, NAGDCA’s new virtual engagement and learning series launching in October during National Retirement Security Month. To register for and learn more about Connect, click here.

NAGDCA provides education, information, and training in all aspects of public plan administration to support members in creating plans that enable secure retirement outcomes for their participants. NAGDCA conceived National Retirement Security Week in 2006 to spur a grassroots movement to increase awareness of the need to save adequately for retirement; the effort was extended to National Retirement Security Month in 2020. Senate resolution for the focused awareness-raising effort continues with bipartisan support annually. To learn more about NAGDCA, visit

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