Income Target-Funds Reach $22B in Assets in 2024

Assets in mutual fund and collective investment trust (CIT) target-date series rose 15% in 2024, reaching $3.97 trillion as of year-end, with income target-date fund series ending the year with $22 billion in assets, according to new research from Sway Research.

A dozen target-date fund series now feature some form of optional post-retirement income, four series of which were launched in 2024, according to the report—The State of the Target-Date Market: 2025—Examining Asset Trends Across Providers, Products, Vehicles, Management Styles, and Glide Path Structures.

One of those newly launched funds—BlackRock’s LifePath Paycheck—finished 2024 with $16.4 billion of assets under management. The launch was so successful LifePath Paycheck finished the year as the 27th largest target-date fund series out of 150 tracked by Sway Research.

The post-retirement income is usually in the form of a deferred fixed annuity or group variable annuity with a guaranteed lifetime withdrawal benefit (GLWB). Most of the products rely on a small set of insurance providers, Sway found, including Lincoln (5 series), TIAA (4 series, including the Nuveen Lifecycle Income Index series, also introduced in 2024), and Nationwide (3 series). Equitable Financial and Brighthouse Financial underpin the BlackRock LifePath Paycheck product set.

Plan Sponsor and Participant Interest 

The growth in assets invested in such options comes as awareness builds about the need and desire for income solutions. A recent report from Greenwald Research found that participating in a DC plan alone will not be enough to allow workers to retire comfortably, and a majority of workers participating in employer-sponsored plans (86%) said they want their employers to offer in-plan retirement income options.

Slightly more than half of plan participants surveyed by Greenwald said they feel employers have a high level of responsibility for helping employees generate income or develop a withdrawal strategy in retirement. Meanwhile, plan sponsors are still concerned about the complexities of offering such strategies, the fees associated with them and the reputation of annuities and guaranteed lifetime income.

Only one-quarter of plan sponsors said they currently have at least one retirement income option in place, while another 30% said they are seriously considering implementing such options. Both plan sponsors and participants in the survey expressed the need for more education on retirement income options, as well as tools that help determine when participants should start receiving retirement income.