401(k) Annuities Are Growing Fast, but Only 5% of Employers Currently Offer Them

The Worry Is Real, and It's Getting Worse

Seventy-six percent of workplace savers believe their generation will have less retirement income certainty than previous generations, according to a BlackRock survey conducted between April 15 and May 16, 2026, polling 1,312 workplace savers alongside research firm Escalent. That number has climbed steadily from 67% in 2021.

This isn't abstract anxiety. The defined-benefit pension is largely gone. Social Security's long-term solvency is a perennial political football. That leaves most Americans dependent on whatever they've managed to sock away in a 401(k), hoping their savings outlast them.

Annuities in 401(k)s: The Numbers

Assets in target-date funds that include annuity features grew to $44 billion as of the end of March 2026, up from $25 billion a year earlier, according to Morningstar. That's less than 1% of the more than $4.8 trillion in total target-date fund assets as of the end of 2025.

On the employer side, a Plan Sponsor Council of America survey found that only 5% of plan sponsors currently offer a target-date fund with an annuity option. Another 15% say they're considering it.

Morningstar's assessment is direct: "Target-dates with annuities are still a small drop in the ocean of target-date assets, but there are signs that more plans are adopting these strategies and reasons to believe the growth will accelerate."

How These Products Actually Work

The structures vary. Some target-date funds with annuities allow older workers to convert a portion of their savings into an insurance contract that pays out monthly for life. Others allow withdrawals of a set percentage of savings annually for as long as the participant lives.

Major firms expanding into this space include BlackRock, JPMorgan Asset Management, Fidelity, Vanguard, and TIAA, according to CNBC's reporting.

Washington Is Moving

Two policy developments are pushing this forward. The Department of Labor has proposed a rule to make it easier for employers to include alternative assets, including lifetime income strategies like annuities, in 401(k), 403(b), and defined contribution plans.

There's also a bipartisan bill in Congress, the Retirement Simplification and Clarity Act, that would allow workers to roll 401(k) assets directly into a qualified annuity.

Bipartisan support in the current environment means something. Both parties see political upside in helping workers feel more financially secure heading into retirement.

The Gender Gap Nobody Talks About

Women are more worried about outliving their money than men are, and they live longer on average. Yet BlackRock's survey found women are LESS likely to adopt guaranteed income solutions.

"They're living longer. Of anyone who would really need that lifetime income, it would be women, yet they're not asking," said Jaime Magyera, head of retirement and U.S. wealth advisory at BlackRock.

The gap between women's heightened concern about outliving their savings and their lower uptake of guaranteed income products is one of the more striking findings in the BlackRock data — and one with direct implications for how annuity adoption is marketed and structured going forward.

The Case Against Moving Fast

Skeptics of annuities in 401(k)s raise legitimate concerns. Annuity products are complex, often carry fees that erode returns, and lock up liquidity. An investor who converts a large chunk of savings into a monthly annuity stream gives up the ability to access that capital for a large expense, a medical emergency, or to pass on to heirs.

One expert's critique cuts deeper than fees. "The guidance from the Department of Labor is all about how to reduce your liability in case your workers try to sue you," said Eileen Appelbaum, a senior economist and co-director at the Center for Economic and Policy Research. "It's not about improving guardrails, and it's not about raising standards for investment in riskier assets."

Financial advisors also warn investors to understand whether lifetime income is available in the fund, whether the monthly payment is fixed or inflation-adjusted, and what the fees will be before committing.

Those concerns don't disappear because adoption is growing. They merit serious consideration, particularly for workers who don't have other liquid savings outside their 401(k).

What Actually Comes Next

The DOL's proposed rule is still pending finalization. Until it clears, employers considering annuity additions face existing legal uncertainty around alternative assets in plan menus. The Retirement Simplification and Clarity Act hasn't passed yet.

The more immediate question is whether the employer adoption rate, currently at 5%, moves meaningfully once a final DOL rule is in place. Morningstar's data shows asset growth has been sharp, but it's largely concentrated among plans that already adopted early. Whether mid-size and small employers follow, or whether this stays a feature of large corporate plans, will determine whether this trend actually reaches the workers most at risk of outliving their savings.