New tools to convert retirement savings into income include investments with annuity-like features and a crowdfunding scheme from the 1600s.

For a long time, the question of saving has dominated the retirement conversation. How big does your nest egg need to be? 

Now, with some 11,000 boomers turning 65 every day — a phenomenon dubbed “Peak 65” — most of whom are facing a longer retirement than past generations, concerns about converting savings into income loom large. “Most people don’t know how to manage years of savings, how much to withdraw, or how to make sure the money lasts,” says Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute (EBRI).

Time was when pension plans, with their predictable lifetime payouts, covered those bases. But only about 15 percent of private-sector workers have access to a pension now. And today’s largely self-funded retirement plans, from IRAs to 401(k)s and similar, typically don’t come with a built-in income-generator tool.

That’s changing. The urgent need for retirement-income tools is driving innovation. From a new investment fund that includes annuity-like features to the revival of a method developed in Europe in the 1600s for crowdfunding retirement, these newcomers deserve a closer look.

The Plot Twist No One Planned For

Before digging into what’s new and why, it’s worth understanding how the retirement income dilemma emerged. “The industry didn’t suddenly wake up to the need for income,” says Nick Nefouse, global head of retirement solutions at BlackRock. “We’ve been working on this problem for nearly two decades.”

Briefly: What pushed financial companies into a proactive mindset was the fallout from the decline of pension plans. Over time, many workers adapted to defined contribution, i.e., self-funded plans such as 401(k)s. But after decades of saving, few had any meaningful way to convert their savings into an income stream. Although 401(k) and similar accounts required retirees to take a baseline withdrawal each year (known as a required minimum distribution or RMD), it was difficult for retirees to determine whether that required amount was too much, too little, or enough for them to live on for the duration.

What pushed financial companies into a proactive mindset was the fallout from the decline of pension plans.

That, coupled with the reality of living longer has provoked widespread anxiety. A 2025 survey by BlackRock found that 66 percent of employees with workplace plans are worried about outliving their savings, while 93 percent expressed interest in owning products designed to generate income. 

“It became clear that the industry needed to evolve from thinking only about wealth accumulation to helping people turn savings into reliable income,” says Nefouse.

How to Fit an Annuity Into Your 401(k)

That evolution is showing up in a number of ways. Some companies, like Vanguard, have begun offering partial withdrawals from 401(k) accounts, giving retirees more flexibility in structuring their income. Others are developing income-generating products. Stone Ridge Asset Management created the LifeX Income ETFs, which are designed to provide reliable monthly distributions, notes Russ Hill, executive chairman of financial advisory firm Halbert Hargrove and the author of Optimizing Longevity. (Hill is also chair of the SCL Advisory Council.)

Millions of Americans now own target-date funds — and these funds hold a total of more than $4 trillion in assets, according to the Investment Company Institute (ICI). For context, total assets in defined contribution plans, such as 401(k) and 403(b) plans, are roughly $13.9 trillion according to ICI.

One of the most promising of these is a fund that combines a stalwart of retirement plans, the target-date fund (TDF), with an annuity-like product that can generate a steady paycheck in retirement. 

How does that work? 

Target-date funds have long provided a type of all-in-one portfolio for retirement savers, automatically adjusting holdings over time to manage risk. While problematic in some regards (e.g., higher cost, lack of investment choices), the “set it and forget it” nature of target funds proved so convenient that the Pension Protection Act of 2006 allowed employers to include these funds as default investment options in retirement plans. 

Millions of Americans now own target-date funds — and these funds hold a total of more than $4 trillion in assets, according to the Investment Company Institute (ICI). For context, total assets in defined contribution plans, such as 401(k) and 403(b) plans, are roughly $13.9 trillion according to ICI.

In other words, with TDFs already woven into the fabric of retirement planning, they were a natural choice for the next step: adding an annuity feature to provide a steady stream of retirement income. 

To Nefouse’s point, developing such a hybrid product has taken years. Today, a handful of financial companies now offer a hybrid annuity target-date fund, including AllianceBernstein, BlackRock, State Street Investment Management, TIAA and T. Rowe Price. Last December, Vanguard, the largest provider of target-date funds, became the newest entrant in this space, in collaboration with TIAA, with a planned launch later in 2026.

What’s striking about this new option is how it echoes the traditional pension idea. But instead of the employer providing a lifetime payout, these accounts are self-funded by retirees. One downside of these accounts is that plan participants can convert only part of their account balances to the annuity or income “sleeve,” as it’s called: the limit varies depending on the plan. 

Another disadvantage: It’s not clear whether participants can roll over these funds when they leave their employer. This and other features may change as these products evolve. 

The Retirement Club That Pays Until You Die

“Crowdfunding” wasn’t a word in 17th-century Europe, but the concept of pooling money to support a mutual goal would have been familiar to many people at the time. Tontines, named for an early proponent Neapolitan banker, Lorenzo de Tonti, were one such vehicle that became popular as a way to combine financial resources to fund a war — or to help members of a group cover the costs of old age. 

Tontine rules varied widely, but the basic concept was that members would agree to contribute a certain amount of money to the group, and each member would receive a regular payout from that common pool until they died (usually with any remaining funds forfeited to the shared pot). 

If that sounds almost like an annuity, you’d be right, says Richard Fullmer, an investment strategist and founder of Nuovalo Ltd., which conducts research on pooled longevity risk. “It’s a way of self-insuring with a group against the risk of someone running out of money,” he says. While annuities are complex insurance products, tontines can have a more flexible structure. This is partly why you see modern tontine-like retirement plans in Canada, Australia and Europe, Fullmer says. 

Fullmer is currently consulting with the government of Colombia on the creation of a modern tontine arrangement that may be available there soon. And a similar option may not be so far off in the U.S., after an executive order directing the Department of Labor to consider a range of alternative investment options for retirement savers. 

It’s unlikely anyone would term these new strategies as disruptors, per se, but don’t underestimate the significance of these innovations. They spell good news for millions of hard-working savers, who can think about the future with a bit more peace of mind. 

MP Dunleavey is an award-winning journalist who was previously a New York Times personal finance columnist and a contributing editor to Money magazine. She is a columnist for SCL Magazine and a regular contributor to the Kiplinger Retirement Report.