New Research Points to Lifetime Income as the Missing Link to Global Retirement Security

Key Terms

lifetime-income pooling financial

Lifetime-income pooling is a retirement arrangement where many people combine their savings so payments can be paid out for each member’s entire life, turning individual nest eggs into steady lifelong checks. Like a neighborhood potluck where everyone contributes so no one goes hungry later, pooling spreads the chance that someone outlives their savings across the group; investors pay attention because it affects demand for annuities, insurers’ long-term liabilities and predictable cash flows.

defined contribution financial

A defined contribution plan is a retirement savings arrangement where the amount put into an employee’s account is fixed by a formula or contribution schedule, but the final payout depends on how the invested money performs. Think of it as a personal savings pot that grows or shrinks with market returns; for investors, it matters because companies offering these plans have more predictable short-term costs but shift long-term retirement risk onto employees, affecting corporate liabilities, cash flow and workforce stability.

defined benefit financial

A defined benefit is a retirement promise where an employer guarantees a specific payment to a worker after they retire, usually based on salary and years of service. Think of it as the company promising a fixed monthly pension like a lifetime paycheck; investors care because fulfilling that promise is a long-term liability that can require large cash payments, affect a company’s profits and creditworthiness, and change the business’s financial flexibility.

annuity financial

A contract that converts a sum of money into a stream of regular payments over time, often used to guarantee income in retirement. Think of it like trading a lump sum for a steady paycheck: it matters to investors because it alters return potential, liquidity, fees and risk exposure—some annuities promise fixed payments while others vary with market performance—so they affect portfolio income planning and how quickly capital can be accessed.

replacement rate financial

The replacement rate is the percentage of a worker’s pre-retirement income that is expected to be provided by pensions, Social Security and other retirement income after they stop working. Investors care because it helps estimate how large retirement liabilities, consumer spending power, and demand for income-producing investments will be; think of it as how much of a paycheck needs to be ‘replaced’ by savings and income streams in retirement.

decumulation financial

Decumulation is the process of withdrawing money from savings, retirement accounts, or investment portfolios to cover living expenses after the years of building wealth. It matters to investors because the speed and method of withdrawals affect how long savings last, tax bills, investment choices and vulnerability to market downturns — like eating from a stocked pantry where how fast you eat determines whether supplies last through a long winter.

inflation-sensitive assets financial

Inflation-sensitive assets are investments whose value or income tends to rise when the general price level in the economy increases, such as real estate, commodities, Treasury Inflation-Protected Securities, and some stocks tied to raw materials. They matter to investors because they can help preserve purchasing power and offset the erosion of returns during periods of rising prices—think of them as a financial thermometer that warms up when inflation heats the economy.

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“The Case for Lifetime Income” study from Prudential Financial and the Global Aging Institute offers policymaker guidelines to strengthen retirement systems.

• Lifetime-income pooling can make retirement systems more efficient.
• Report suggests countries could potentially deliver the same retirement security at ~20% lower cost when benefits are paid as lifetime income rather than lump sums.

NEWARK, N.J.--(BUSINESS WIRE)--

Today, during the Spring IMF World Bank Meetings, Prudential Financial, Inc. (NYSE: PRU) unveiled new global research conducted by the Global Aging Institute (GAI) showing that while retirement savings have grown in many countries, most systems still leave individuals on their own to manage the risk of outspending or outliving their savings. The study concludes that lifetime income can significantly strengthen retirement security, helping people spend more confidently while reducing the overall cost and strain on retirement systems.

The Case for Lifetime Income research highlights the essential role of lifetime income in enhancing retirement security for individuals and society. The industry collectively needs to make it easier for retirees to turn appropriate portions of their savings into an income stream that lasts their lifetime.

“Retirement security is one of the most defining issues of our time and solving for it will require collaboration across employers, financial institutions, and policymakers,” said Phil Waldeck, head of U.S. Businesses at Prudential Financial. “For Prudential, our role in addressing this new era of longevity is helping individuals, financial advisors and workplace plan sponsors move beyond just account balances and savings to meet today’s critical income planning and decumulation needs of aging populations.”

GAI studied economic trends in Australia, Japan, the Netherlands, the United Kingdom, and the United States, showing the evolving retirement systems. While retirement savings are trending upward among defined contribution-style systems, following the shift from defined benefit to defined contribution plans, many systems still rely on purely voluntary withdrawal or income strategies that, by their nature, contain fundamental risks of inaction.

“Our analysis shows that when countries fail to make adequate provision for lifetime income, it greatly reduces the efficiency and increases the cost of their retirement systems while needlessly leaving individuals at risk of outliving their savings,” said Richard Jackson, co-author of the study and the president and founder of the Global Aging Institute.

The report provides a set of policy guidelines that would protect lifetime income by normalizing or defaulting to longevity pooling, while preserving flexibility and helping manage market volatility, inflation, or interest-rate concerns. While there are not “one-size-fits-all” lifetime income and retirement security solutions, the study offers broad policymaker guidelines, which, among others include:

• Lifetime income should, at a minimum, be made the default option in all employer pension systems or workplace retirement plans.
• To minimize costs, standardize products and increase the scale of annuity purchasing pools by centralizing delivery of lifetime income, potentially using exchanges to connect employers with providers.
• State pensions, in combination with other tiers of the retirement system, should consider adopting a universal recommended replacement rate of 75 percent, a sensible target for average-earning workers.
• The collective industry needs to continue to innovate and offer flexible solutions, such as access to financial advice, as well as mechanisms to help manage inflation, interest rate, and other risks to protect against volatility, allow higher returns and provide exposure to inflation-sensitive assets.
• Translate account balances into equivalent lifetime income payments when communicating with participants during the accumulation phase and guarantee them access to an appropriately qualified and objective advisor as they approach retirement.
• To plan for the decumulation phase, participants should be guaranteed adequate financial advice with a qualified and objective advisor to build holistic financial plans for retirement.

Among the countries studied, four of the five countries¹ have large, funded retirement savings systems and share a pressing need to ensure that these systems provide adequate lifetime income.

To read the full report and learn more about its findings, please visit the Prudential Newsroom.

ABOUT THE GLOBAL AGING INSTITUTE

The Global Aging Institute (GAI) is a nonprofit research and educational organization dedicated to improving our understanding of global aging, to informing policymakers and the public about the economic, social, and geopolitical challenges it poses, and to encouraging timely and constructive policy responses. GAI’s agenda is broad, encompassing everything from retirement security to national security, and its horizons are global, extending to aging societies worldwide. GAI was founded in 2014 and is headquartered in Alexandria, Virginia. GAI’s Board of Directors is chaired by Thomas S. Terry, who is CEO of the Terry Group, past president of the International Actuarial Association, and past president of the American Academy of Actuaries. To learn more about the Global Aging Institute, please visit its website at www.GlobalAgingInstitute.org.

ABOUT PRUDENTIAL

Prudential Financial, Inc. (NYSE: PRU), a global financial services leader and premier active global investment manager with approximately $1.6 trillion in assets under management as of Dec. 31, 2025, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees help make lives better and create financial opportunity for more people by expanding access to investing, insurance, and retirement security. Prudential’s iconic Rock symbol has stood for strength, stability, expertise, and innovation for more than 150 years. For more information, please visit news.prudential.com.

To access the advice of financial professionals, visit here to find a local financial professional in your area.

Prudential is not affiliated with the Global Aging Institute.

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¹ The exception is Japan, which has a relatively small funded retirement system but needs to greatly expand it in coming decades.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260415862328/en/

MEDIA CONTACT:

Claire Currie
claire.currie@prudential.com

Source: Prudential Financial, Inc.