Woman on tablet in home office

A Shocker May be Lurking on Your Next 401(k) Statement

Monthly Income Estimate

The 2019 Secure Act required inclusion of “lifetime income” on 401(k) statements. Many Americans will get their first look at these illustrations on their Q2 2022 statements. The timing for the rollout of the information is awkward given the way portfolios have shrunk during the market’s 2022 slide.

The data may also trigger a stress response as it illustrates how retirement savings translate into an income stream. Seeing that monthly projection will have people imagining what kind of lifestyle they will be able to afford once they stop working.

The Fine Print

The number simply takes what you currently have saved and calculates an estimated monthly payout on two different annuity assumptions: one where income is paid to just one person, and the other that pays for the individual and the surviving spouse. Since the number doesn’t take into account future contributions or apply a forward-looking growth rate, it will underestimate your payout unless you retire today.

Also, no consideration is given to other savings or social security payments.

Making Retirement Real

The estimated income number can help make the idea of a retirement nest egg less abstract, especially for younger investors. It may also give investors a clearer understanding of the future and possibly incentivize them to put more of their paycheck into savings.

Policymakers are hoping that Americans will rethink their approach to retirement savings as a result of this “lifetime income” notation. Given a recent PwC report finding 26% of Americans aged 30-44 have nothing saved for retirement, there’s plenty of reason why.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

TLS 1.2 Encrypted
Equal Housing Lender