Understand the Lifetime Income Projections Coming to Your 401(k) Statement

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It’s now up to you to decide how much to invest in your employer’s defined contribution plan (if it even has one), and how to allocate that investment between different investment options.

The SECURE Act’s Lifetime Income Projection Requirement and When You May See It

The SECURE Act requires administrators to disclose to plan participants (i.e, to you) at least annually your “lifetime income stream,” which is how much you could expect to be paid monthly if you were to convert your plan balance to a stream of guaranteed monthly checks.

What Your Lifetime Income Projection Will Tell You (and What It Won’t Tell You)

The idea behind the lifetime income projection disclosure is to illustrate for you how your balance would translate into lifetime income.

How You Should View Your Own Lifetime Income Projections

Since you’re still in the accumulation phase, you probably think of your plan in terms of how much money you’ve set aside, your balance. As you approach retirement, that balance will (hopefully) become a very high number.