Perspectives : Investment | January 05, 2023

What does it take to build a retirement income solution?

Read time: 5 minutes

With so many participants at or nearing retirement, investments intended to provide participants with retirement income are having a moment.

Service providers are rushing to market with new products, much of them focused on annuities.1

The problem is that—in some cases—that’s where the focus stops.

We believe retirement income is uniquely complex, requiring a level of personalization that can’t be achieved with a single product. It’s why we’ve built a spectrum of solutions that includes annuities as a potential piece of an individual participant’s retirement income solution, not the solution itself.

Our approach recognizes that annuities may be appropriate for some—not all—participants. Annuities are best suited for those who:

  • Expect to live a long life.
  • Have a low risk tolerance for outliving their assets.
  • Can maintain an adequate pool of assets to meet unexpected expenses after purchasing the annuity.
  • Have no legacy intent for the money used to purchase the annuity.

To ensure Vanguard supports the need for these participants, we provide access to implementation of out-of-plan annuities through Hueler Income Solutions® annuity platform. This enables individuals to obtain institutionally priced income annuity quotes from multiple insurance companies on a conflict-free, no “pay-to-play” basis.

Annuities belong to a spectrum of solutions that we’ve developed so every participant can meet their unique retirement income goals and engage with Vanguard in the way they prefer.

A spectrum of solutions vs. a one-size-fits-all strategy

Every participant’s prioritization of goals, risk tolerance around meeting goals, and resources available to meet each goal are different and can vary quite dramatically. 

Combine this with the unique health, longevity, and tax situation of every participant, and it’s easy to understand why a one-size-fits-all retirement income solution may not work for all participants.

That’s why we provide a range of retirement income options.

For participants who prefer a self-directed approach, we offer:

  • Spending service. An annual personalized retirement spending recommendation based on characteristics such as the participant’s asset allocation and age.
  • Investment strategies. These include Target Retirement Funds and Trusts that support different spending goals with embedded asset allocation.
  • Participant guidance. A client experience that includes guidance regarding the equity landing point that aligns with retiree goals. 

For participants who want more help, we offer comprehensive advice options for all stages of the financial journey, including leading to and living through retirement. Our inclusive approach, built so that every investor, from every background, at every stage of life can access, understand, and implement the advice and guidance they need.

In contrast, some financial service providers simply offer an in-plan annuity as a single retirement income option. And more recently, we’ve seen others position their target-date funds (TDFs) with an annuity component as a single retirement income solution.

TDFs are great as qualified default investment alternatives (QDIAs) due to their ability to get participants to retirement. But because no two participants are alike, we believe TDFs with an annuity component aren’t the solution for everyone.

The decision to purchase an annuity is a highly personal one with many factors to consider, including:

  • How long does the participant expect to live given current health and family history?
  • How much of the participant’s accumulated wealth should be annuitized?
  • What is the best time for the participant to purchase an annuity?
  • Which annuity is the best choice?
  • Is the peace of mind that an annuity might bring worth the annuity?
  • Can the participant become comfortable exchanging liquid assets for an illiquid contract with an indefinite payoff?

Continued investment

We believe participants need more than just a single-product solution. Our approach to retirement income combines participant guidance, spending services, and investment strategies to help participants throughout retirement.

And we won’t stop. We’re continually investing in new technology and innovating our services. But we’re not chasing the latest flashy trend. Our innovation begins and ends with what we think will be best for your participants and your plan. 

If you’d like to learn more about our retirement income solutions, please reach out to your Vanguard representative.

Annuity income guarantees are subject to the claims-paying ability of the issuing insurance company.


  • For more information about Vanguard funds, visit to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
  • All investing is subject to risk, including the possible loss of the money you invest.
  • Investments in Target Retirement Funds and Trusts are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Income Trust/Fund and Income and Growth Trust have fixed investment allocations and are designed for investors who are already retired. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.
  • Vanguard is responsible only for selecting the underlying funds and periodically rebalancing the holdings of target-date investments. The asset allocations Vanguard has selected for the Target Retirement Funds are based on our investment experience and are geared to the average investor. Investors should regularly check the asset mix of the option they chose to ensure it is appropriate for their current situation.
  • Vanguard Target Retirement Trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.
  • Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.