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From Retirement Savings to Lifetime Security: Prudential Pushes for Automatic Income Plans

New proposal highlights how automatic lifetime income options in workplace retirement plans could help employees turn years of savings into a dependable source of income after retirement

Newark, New Jersey, 12 November 2026 – Saving for retirement is an important part of financial planning, but knowing how to use those savings after leaving the workforce can be equally challenging. Many employees spend decades building their retirement funds, yet face uncertainty about how much they can withdraw each year without running out of money. Addressing this concern, Prudential Financial is proposing a new approach that could make guaranteed lifetime income a standard feature of workplace retirement plans.

In its white paper, titled "Automatic Lifetime Income: The Missing Outcome in Today's Retirement Plans," Prudential recommends that defined contribution (DC) retirement plans automatically allocate a portion of employees' retirement savings toward an annuity. An annuity is a financial product that provides regular payments, often for the rest of an individual's life. Employees would retain the freedom to opt out if they prefer to manage their retirement savings independently.

The proposal builds on automatic enrollment and automatic contribution increases, which have helped employees participate more easily in workplace retirement programs. These features allow workers to begin saving and gradually increase their contributions without having to make repeated decisions.

According to Vanguard's How America Saves 2026 report, 61 percent of the defined contribution plans it serviced used automatic enrollment in 2025, compared with 10 percent in 2006. Participation reached 94 percent in plans with automatic enrollment, compared with 64 percent in plans where employees had to enroll voluntarily. Prudential believes applying a similar approach to retirement income could help employees prepare for the financial responsibilities that follow retirement.

The proposal also reflects growing interest in predictable retirement payments. According to Prudential's 2026 Global Retirement Pulse Survey, 66 percent of US non-retirees preferred guaranteed monthly income for life, while 34 percent preferred receiving their retirement savings as a lump sum and managing the money themselves.

A major advantage of automatic lifetime income is the potential to reduce the risk of outliving retirement savings. Prudential's research highlights a modeled example in which allocating 20 percent of retirement savings toward lifetime income increased annual retirement income from $41,469 to $47,690. Approximately 30 percent of the total income in this example would be guaranteed for life, excluding Social Security benefits. The remaining savings would continue to provide flexibility for investments, healthcare expenses, and other financial needs.

The need for better retirement planning is further highlighted by the survey findings. Only 16 percent of respondents aged 50 and older said they had a clearly defined strategy for withdrawing their retirement assets. Furthermore, just 28 percent worked with a dedicated financial adviser regularly or when needed. These figures point to the challenges individuals face when converting accumulated savings into a reliable income stream.

Prudential also emphasizes the importance of maintaining employee choice and providing clear protections for employers introducing these arrangements. Its proposal includes allowing participants a period to reverse their automatic income selection and regain access to their savings.

As people spend longer periods in retirement, financial security increasingly depends on more than the amount saved during their working years. Prudential's proposal highlights the importance of connecting retirement savings with dependable income solutions. By combining guaranteed payments with flexible investment options, workplace retirement plans could help employees approach retirement with greater financial confidence.