What to Know about Including Annuities in Your 401k
Broadcast Retirement Network's Jeffrey Snyder discusses the inclusion of annuities in 401k (or 403b or 457b) plans with Debbie Carlson, contributor to The Wall Street Journal.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Debbie Carlson. She's a contributor to the Wall Street Journal. Debbie, great to see you.
Thanks for joining us in the program this morning.
Debbie Carlson, The Wall Street Journal
Thanks for having me.
Jeffrey Snyder, Broadcast Retirement Network
And you cover a wide range of topics. One topic that you covered recently was around annuities and annuity and retirement plans. I saw it, I thought it was a great piece.
Was hoping we could have a conversation about it. So, you know, it's a baseline question. Let me just, based on your research and all the deep diving you've done, investigative work, are annuities gaining in popularity?
Debbie Carlson, The Wall Street Journal
Well, thanks for having me again and thanks for reading the story. Appreciate that. So it really depends on who you ask.
So according to annuity groups that track sales, they say yes. According to most recent information from a group called Lymra, which are Lymra, which tracks the sales, they say that as people are getting older, if they don't think social security is going to cover all their fixed costs, and if they don't have a pension, they may be worried about, you know, running out of money in retirement, which obviously is a worry we all have. So according to Lymra, one of the biggest ones that are being bought is a variable annuity called a registered index annuity.
And this one has partial protection from losses from the stock market, but also gives you a chance to participate in some stock market upside. So it gives you some growth, but some protection from the downside. Now, according to groups like EBRI, a lot of people aren't interested.
One of their most recent surveys says 83% who have a workplace retirement plan say they want to use some of that money for a guaranteed income product. However, only three in 10 actually expect to use that money. So yeah, so it's, you know, who's to say that the general population is interested in it?
Well, it's hard to say, but you know, it is something people are actually thinking about, I would say.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, and look, I think, you know, as a veteran of the retirement industry or someone who spent a lot of time in there, I don't know if veteran is the right word, but if someone who spent a lot of time, the conversation certainly shifted from saving to, or accumulation to the drawdown. And I think what you found probably aligns with what is the common perception within the industry. Let me kind of drill down.
One question I had, let's talk about these 401k or retirement programs. You did some work there as well, looked at annuities. Are these in-plan annuity options becoming popular?
I know you tied it back to the EBRI survey, but is it kind of analogous to that where, you know, maybe people are used or plan sponsors are adopting these products, but maybe the usage isn't as high as it maybe should be?
Debbie Carlson, The Wall Street Journal
So they are starting to come into 401k plans, but the plan sponsor of America Council says only about 9% of workplace plans have, some sort of annuity product. And that's from what I understand has been kind of flat. So they're coming in to the workplace plan, but whether it's that the plan sponsor isn't offering it, or there's just not demand from the employees, you know, they haven't seen that much growth, but this might change with a new product that's been launched that might be easier to have people adopt because with an annuity, as we know, it's a lot of money at one time.
And, you know, it's really hard to say, to carve out $100,000 from your retirement savings. So they're starting to create a new product called hybrid target date funds. So what you have been seeing are deferred income annuities or SPIAs where you'd carve out a chunk of money, you buy it and it becomes live when you're retiring.
We're starting to see these target date funds coming in, these hybrid funds where you put money in like you would a traditional target date fund, but with a hybrid, a little bit of your money goes to credits to buy an annuity that you may, you have the option but not the obligation to buy the annuity. So maybe we'll start to see bigger uptake because it's less money upfront.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it sounds like, you know, it's about kind of getting over the hurdle in a lot of ways with participants, with employees. And it seems like there's a big educational hurdle. Is that one of the key challenges when you're including or considering including an in-plan annuity?
Is education a big challenge?
Debbie Carlson, The Wall Street Journal
I think it's a massive challenge. I've spoke to two plan advisors and they say that absolutely people need to know what they're getting into no matter what type of annuity, whether it is one of these immediate annuities or a hybrid. People need to understand like what they can buy, how much it's gonna cost, what they get with it and how it might work with their greater savings.
So plan advisors say that if a plan sponsor is going to offer it, that they have to have a lot of information available for people who are interested.
Jeffrey Snyder, Broadcast Retirement Network
And that just makes sense. I think with any investment, I mean, there is a communication component to these plans. It's all participant directed, meaning the employee has to make the decisions or they can defer some of that to, with the target date funds or a managed account product, but they have to understand what they're investing in.
If not, you can't use the program properly. I always would say you can build the best retirement program but if people are using it properly, what good is the retirement program? Let me, you mentioned retirement plan advisors.
I wanted to ask you about the vetting process because that would seem to me that these products seem to be all very unique. So company A, company B, company C, D, E, all the way through seems to be very unique. Are these the individuals that are, these retirement plan advisors, are they the ones doing all the vetting to ensure that they're appropriate for the retirement plan?
Debbie Carlson, The Wall Street Journal
Oh, absolutely. Because you have to remember 401k plans are ERISA. So there has to be a level of due diligence.
So somebody is going through and choosing what's available to you. So it's probably, not probably, it should be a very high quality type of annuity versus what you would get just in the retail market. But that also probably limits what you have.
So you may only have one or two annuities available to you. So yeah, somebody is going through and choosing it. And one of the benefits you can think of, if you would call this a benefit, is if you were thinking of an annuity and looking at your end plan, it's probably going to be a little cheaper because first you're not paying a commission like you would in a retail brokerage.
And there's institutional pricing. So you think that because your plan sponsor is doing this that the cost should be lower than what you would have found in like a retail marketplace.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, certainly I think the products in some ways make a lot of sense. I think, but everyone, as you and I both know, Debbie, everyone's unique and has their own perspective and personalization is so critical that it's going to be, if you've got a thousand people in a retirement plan, you're going to have a thousand, potentially have a thousand different decisions or a thousand different personal circumstances. So I think it's my personal opinion that it's a work in progress, but I think we're probably headed in the right direction.
Any closing thoughts?
Debbie Carlson, The Wall Street Journal
Yeah, I think it's really important because annuities are really not for everyone. And there is some debate whether some people need them. And I think that's a question that you need to talk with with your financial advisor or even with the plan advisor because they are expensive.
We don't know the cost of, it's kind of embedded in the product. So that's something to consider. And you may not need to have so much certain amount of money that is not available to you because once you buy it, that money is locked up.
So you really need to think about what you need for your retirement.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, you can't just give it back. No. You can't just say, here, take it back.
Debbie, just out of curiosity, you do a lot of writing on a lot of different topics. Do you intend at some point to follow up on this topic maybe from a different angle? You don't have to spill the angle, but is this a topic that you'll be covering over the next six to 12 months?
Debbie Carlson, The Wall Street Journal
Yeah, I imagine so because this particular story was just really kind of laying out what's there as opposed to say where somebody who can use this what type of person is that? Or maybe that person who doesn't need that. And I think, especially because these are a little controversial that there's a lot of debate, a lot of heated debate out there about annuities.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, you talk to anybody, they have this thought of the old lunchroom. If you were a teacher or work in a hospital, there were the old lunchroom and you had all these providers come in. The world's changed, it's shifted, I think.
But along with that change comes education. Debbie, we're gonna have to leave it there. Great work.
Thanks for making a few minutes for us. And look, we look forward to having you back on the program again very soon.
Debbie Carlson, The Wall Street Journal
Appreciate it.
The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
This story was originally published April 20, 2026 at 7:30 AM.