Why ‘Auto Income’ is the Next Logical Default: Matt Condos Op-ed
Retirement plans are evolving not only in the lifetime income solutions they offer, but also in how those solutions are introduced to members. While plan income decision making continues to evolve in the industry, there is growing recognition that how these decisions are built into the plan can play an important role in helping members turn savings into income.
For years, defined contribution plans have followed a clear principle: Make it easy for members to do the right thing and set themselves up for a better retirement. Automated features such as enrollment, escalation, and rebalancing have helped reduce friction and foster positive retirement habits by simplifying member decisions that might otherwise be delayed or avoided.
Today, as the conversation about retirement shifts from savings to spending, the next question is natural: If automation can help improve outcomes during savings, why shouldn’t it also play a role during the retirement income phase?
This is not a new idea. The industry has been talking about solutions for generating income in the plan for years. What is changing is the context around participant needs and the role design can play in satisfying them, as well as the regulatory support for these decisions.
A landscape of preferences that is harder to navigate than it seems
Many plan sponsors already recognize that employees have access to more tools and benefits than ever before, but understanding isn’t necessarily catching up. Lincoln 2025 Wellness@Work the study found that only 50% of workers are familiar with the benefits their employer offers, and only 28% feel very confident about their retirement readiness.
This gap becomes more noticeable when it comes to income. Additional Lincoln Financial Studies Conversations about retirement planning reveal that 54% of consumers do not have a plan for retirement income or funding for their retirement.
In practice, many members save, but fewer have turned those savings into a solid income plan.
For plan sponsors, this can create a problem. If participants are unsure of their understanding of existing benefits, it can be difficult to expect them to make fully informed decisions on topics such as retirement income.
From “Automatic Savings” to “Automatic Income”
Automatic functions have been effective because they recognize how humans make decisions. When faced with complexity or a wide range of options, many participants default to inaction. Well-designed plan features can help by reducing the number of decisions people have to make on their own, while still maintaining flexibility.
Most argue that they are more likely to remain in the income system if automatically enrolled, suggesting that the way these options are introduced may be as important as the options themselves.
This is where the concept of “auto salary” comes into play. It is not about abolishing all elections. It’s about creating a starting point that can be easier to understand and easier to maintain, in the same way that auto-enrollment created a starting point for retention. This can provide a clear and simple framework for many participants and is designed to build confidence that they are moving in the right direction. Then, if someone wants to expand on that base level, they can take additional steps (on their own or with their financial advisor, if possible) to further customize their retirement income.
Lincoln’s Wellness@Work data shows that participants are open to this approach. Among workers whose employers offer a guaranteed income option, 92% responded positively, with 46% describing it as a “wow factor”. Even among those who don’t have access today, 78% said yes, and about a third describe it the same way.
Importantly, participants also demonstrate an openness to automatic approaches. Most argue that they are more likely to remain in the income system if automatically enrolled, suggesting that the way these options are introduced may be as important as the options themselves.
Integrate revenue into the default experience
For plan sponsors, the focus is no longer just whether to offer retirement income, but how to incorporate it into the plan in a way that is understandable, scalable and easy for participants to interact with.
One approach is to create structures that participants are already using today. Target-date funds and managed accounts have long served as qualified default investment alternatives during savings, helping to simplify investment decisions while supporting participants. Similar structures can support the transition to revenue by building revenue features into target date solutions or enabling personalized revenue strategies through managed accounts.
Placed this way, retirement income is not a separate decision that participants must make in the years leading up to and during retirement. This becomes part of the planning process, helping to transition from saving to spending in a structure that participants already know.
For plan sponsors, this can make implementation simpler. Rather than introducing a new stand-alone feature, income can be built into existing defaults using approaches already familiar in plan design.
As plan sponsors continue to evaluate retirement income decisions, the question is not whether participants value income, but how to make it easier for them to interact with it.
Automatic features have changed the accumulation, making participation easier and more consistent. Applying the same design philosophy to revenue can help participants move from saving to spending to achieve greater clarity and confidence.
As the conversation around retirement income continues to evolve, the opportunity isn’t to introduce something completely new, but to expand on what’s already worked — with the goal of making the easiest way more informed at every stage of the retirement journey.
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