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Fidelity Introduces Retirement Income Solutions for Employees Who Keep Savings in Employer’s Workplace Plan During Retirement
Issued by: Fidelity Investments
Date: Oct. 31, 2019
BOSTON, October 31, 2019 -- Fidelity Investments®, one of the largest and most diversified financial companies, today announced innovative new Retirement Income Solutions for the growing population of individuals who choose to keep their savings in a previous employer’s retirement plan (e.g., 401(k) or 403(b)). With more than half (55%) of retirees /2/ on Fidelity’s platform keeping their savings in a plan past the first year of retirement, Fidelity’s first in-plan retirement solution is designed to be part of an employer’s retirement lineup and combines digital tools, mutual funds and a cash withdrawal strategy to help workers transition retirement savings into a durable income stream.
There are a variety of factors driving this increased focus on retirement income among employers, including a shift in traditional industry practices. First, employers /1/ are increasingly comfortable having workers keep their savings within the company’s savings plan when they retire, meaning more employers now feel a greater responsibility to provide tools and resources to help employees successfully transition into retirement. In addition, employers realize that offering a comprehensive in-plan retirement income solution can improve their overall benefits package as well as help meet fiduciary obligations. Lastly, employers are leveraging the larger asset sizes to more effectively manage the costs of their retirement plans. Typically, this also means lower expenses for workers.
“As an industry, we’ve been very good at helping individuals save for retirement, but more emphasis needs to be made on helping them understand how to draw down their savings once they enter retirement,” said Sangeeta Moorjani, Head of the Employer Experience & Retirement Solutions at Fidelity Investments.
“People work hard every day to save enough to enjoy retirement and, as a result, transitioning into retirement can often be stressful. Fidelity’s new retirement income solution taps into a shift in the marketplace -- the growing trend of employees’ preference to leave savings in their former employer’s plan and employers feeling more comfortable having them leave it there,” continued Moorjani.
Complete Package of Digital Tools, Withdrawal Strategies and Investment Options
Fidelity’s new Retirement Income Solutions designed to help all employees, regardless of their level of savings, and includes three core components: a digital end-user experience, a customizable cash flow withdrawal strategy, and a suite of dedicated retirement income funds, all of which seamlessly integrate into a company’s workplace savings platform.
The Fidelity Managed Retirement Funds are designed to be part of an employer’s retirement plan fund line-up and used by investors at or nearing retirement who plan on withdrawing money from their retirement savings. The funds, which leverage the expertise of Fidelity’s target date investment team, are designed to deliver an age-appropriate asset allocation that evolves over time which is comprised of a diversified mix of underlying equity, fixed income, and short-term strategies.
“We believe that our edge in constructing and managing retirement income portfolios comes from our experience in implementing our investment principles and process. We apply our unique insights and research on capital markets, our understanding of clients’ financial needs, and portfolio diversification to navigate the different types of uncertainty that investors may face over the course of their retirement” said Andrew Dierdorf, co-portfolio manager for Fidelity’s target date strategies, including the Fidelity Managed Retirement Funds.
Fidelity currently offers seven Managed Retirement Funds allowing investors to select a fund that aligns with their birth year. Funds are designed for investors age 60 and older who turned (or will turn) age 70 in or within a few years of the applicable fund’s horizon date – for example, an investor born in 1945 would likely select Fidelity’s Managed Retirement 2015 Fund.
The Fidelity Managed Retirement Funds are available now, while the digital experience (which includes the online planning tool) will be available in early 2020. Fidelity Managed Cash Flow and the digital experience are available at no extra cost to Fidelity 401(k) and 403(b) clients, while there are expenses associated with the Fidelity Managed Retirement Funds.
About Fidelity Investments
The investment risk of each Fidelity Managed Retirement Fund changes over time as its asset allocation changes. These risks are subject to the asset allocation decisions of the Investment Adviser. Pursuant to the Adviser's ability to use an active asset allocation strategy, investors may be subject to a different risk profile compared to the fund's neutral asset allocation strategy shown in its glide path. The funds are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, commodity-linked, and foreign securities. Leverage can increase market exposure, magnify investment risks, and cause losses to be realized more quickly. No Managed Retirement Fund is considered a complete retirement program and there is no guarantee any single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the funds' target dates. The fund is designed primarily for investors who seek to convert accumulated assets into regular withdrawals over time.
Diversification does not ensure a profit or guarantee against a loss.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
Fidelity Investments Institutional Services Company, Inc.,
National Financial Services LLC, Member NYSE, SIPC,
905268.1.0 © 2019 FMR LLC. All rights reserved.
/1/ Fidelity Investments, Design Plan PlanSponsor Survey, May 2017.
This is a press release issued by the company named above. BenefitsLink is not the author. Use of any information obtained from this release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by BenefitsLink.