Legislation proposed in the Senate today would require employers to inform 401(k) participants what monthly income their current account balance could produce in retirement. The bill aims to make 401(k) mailings look more like the Social Security statements, which, since 1989, have informed workers annually about their estimated retirement benefits based on current earnings.
The Lifetime Income Disclosure Act would direct the Department of Labor to issue tables for plan sponsors to use to calculate how much retirement income an annuity purchased with the amount a worker has saved would generate. “This bill will enable participants to receive additional helpful information so they can better plan for their retirement,” says Johnny Isakson, a Georgia Republican who cosponsored this bipartisan bill along with Jeff Bingaman, a New Mexico Democrat, and Herb Kohl, a Wisconsin Democrat.
The monthly income numbers provided in the proposed 401(k) statements would only be an estimate of the income an employee’s nest egg could provide and not a guaranteed stream of retirement revenue. The text of the legislation acknowledges that “actual annuity payments that may be purchased with the total benefits accrued will depend on numerous factors and may vary substantially from the annuity equivalent in the disclosures.”
Tell us, would you find it helpful to get a retirement income estimate on your 401(k) statement?