Welcome to Nuveen

Select your preferred site so we can tailor your experience.

Confirm Your Region

Select Region...

Americas
Asia Pacific
Europe, Middle East, Africa

Confirm Your Location

Select Location...

Canada
Latin America
United States
Australia
Hong Kong
Japan
Mainland China
Malaysia
New Zealand
Singapore
South Korea
Taiwan
Thailand
Other
Abu Dhabi Global Market (ADGM)
Austria
Belgium
Denmark
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Norway
Spain
Sweden
Switzerland
United Kingdom
Other

(Up to 600 characters)

Please check reCaptcha to continue

*Indicates Response Required

Thank You

Thank you for your message. We will contact you shortly.

Retirement investing

A principled approach to TDFs with guaranteed lifetime income

25 Apr 2026

8 min. read

Stay up to date

It could be said that the defined contribution industry is fluent in target-date funds but speaks annuities as a second language. Across the industry there are various mechanisms that target-date fund (TDF) managers can utilize to incorporate, and deliver, a guaranteed lifetime income benefit.* Our conviction is that these solutions, when thoughtfully designed, can offer meaningful outcomes for a broad spectrum of plan participants. Establishing the framework of exactly how to incorporate lifetime income into a TDF is complex, however, but we have attempted to create a simplified and principles-based framework for better understanding these solutions. While it is important to understand the various guaranteed income benefits being offered, we must not forget that these are primarily target-date funds.

Key takeaways:

Target-date fund management should be principled, with a focus on remembering what a target date is for and who it serves.
There are different mechanisms by which a target-date fund can implement lifetime income and each offers benefits and drawbacks.
We believe that a target-date fund should not sacrifice its primary goals just for lifetime income.

Three guiding principles for developing TDFs with guaranteed lifetime income

We believe that good product development begins with having proper first principles. At Nuveen, as we designed our income solution, we focused our efforts on upholding the following three principles, to plant our development efforts firmly in the underlying benefits and familiarity of target-date funds.

1. TDFs, as they are currently constructed, work really well; therefore, change as little as possible.

Our clients do not want us to develop solutions that are dramatically different from the target-date funds that they currently have. Ideally, a target-date fund with guaranteed lifetime income will look, act and feel just like a target-date fund without it. Deviations from this current state — such as higher net expense ratios, as well as investment, contribution and income-election restrictions — should be thoroughly examined, documented and understood.

It is also the case that participants understand target-date funds, and in wishing to keep retirement plan products as familiar and simple as possible, it is worth trying to see what can be done within the TDF framework.

2. As a QDIA, the TDF should be designed for the broadest population of participants, including those who do not want to exercise a guaranteed income benefit.

During the product development process, it is easy to become hyper-focused on the income delivery mechanism. This often leads to solutions that are primarily designed for the subset of participants who will take up the income benefit, without due regard for those participants who will not.

We applaud the objective of delivering guaranteed lifetime income, but we also believe that it needs to be properly subordinate to the broader target-date fund objective of delivering improved accumulation outcomes. In our view, the best way to develop a TDF is to design a solution that aims to deliver larger and/or more risk-controlled nest-eggs for as many participants as possible.

Critically, these solutions ought to hold their own as target-date funds even if no one ever exercised the guaranteed lifetime income benefit.

3. The guaranteed income benefit should be made available to every participant irrespective of the participant’s age and/or contribution history.

We encourage our clients to document and understand any income benefit eligibility criteria. For example, some solutions might require that contributions be initiated by a certain age, while others impose income election windows which cut off access to an unexercised income benefit by a specified age.

We believe that every participant deserves access to the guaranteed lifetime income benefit, especially the eldest — who are often in most urgent need of this benefit. When considering the below approaches, it could be productive to meditate on the following question: “If no one ever exercised the TDF’s embedded guaranteed lifetime income benefit, is it still a good TDF?”

Three primary mechanisms for delivering the lifetime income benefit

1. Target date allocates to a lifetime income instrument

With this mechanism, the manager introduces an allocation to a lifetime income instrument, alongside the TDF’s stock and bond allocations. That is, the TDF is simply adding a net new asset to its strategic asset allocation. Importantly, this will ultimately give participants the option, but not the obligation, to convert some portion of their TDF balance into guaranteed lifetime income during retirement.

While the lifetime income instrument can offer powerful decumulation benefits, we first need to understand how its inclusion within the TDF impacts the risk/return profile of the TDF and, thus, the expected accumulation for participants. Here, it is important to note that not all lifetime income instruments are created equally with respect to their investment characteristics. If the primary goal of the TDF is improved accumulation outcomes, then the investment characteristics of the lifetime income instrument are critically important.

For TDFs that allocate to a lifetime income instrument, the decumulation benefit will be optional. That is, those participants who do not want guaranteed lifetime income need not exercise the benefit. They can simply stay invested in the TDF, process symmetric withdrawals and/or roll into an IRA and work with a financial advisor. However, if a participant does want to exercise the benefit, each TDF will offer varying levels of flexibility with respect to the income election decision

At Nuveen, we recognize that each participant will have a unique retirement journey, and we built Nuveen Lifecycle Income to accommodate and deliver as much optionality as we felt possible, aiming to meet the diverse needs of each participant. For example, while Nuveen Lifecycle Income maintains a ~40% maximum strategic allocation to the TIAA Secure Income Account, a participant has the flexibility to annuitize** between 0% and 100% of their TDF balance. Participants also have the flexibility to annuitize multiple times, and they are not subject to any strict income election windows.

Other TDFs will have different glidepaths that allocate to the annuity instrument at different stages of the TDF cycle, and to different total percentages. Some may impose income election windows or restrictive age gates, and make it difficult for the participant to annuitize more/less than the strategic allocation to the lifetime income instrument. Such solutions take a more rigid approach.

Lastly, it is important to understand who is providing the lifetime income benefit and the various features offered during decumulation. While we won’t cover this in detail here, we believe it is important to work with insurers who have vast experience delivering differentiated streams of guaranteed lifetime income to DC plan participants.

2. Target date fund is wrapped by a lifetime income instrument

Rather than allocating to a lifetime income instrument, some TDFs wrap the portfolio with a lifetime income instrument, either around the entire portfolio, or around a meaningful majority of the portfolio. The type of lifetime income instrument utilized for this mechanism is referred to as a Guaranteed Lifetime Withdrawal Benefit or GLWB.

In general, these GLWB TDFs have two important concepts:

Income Base, which equates to the value upon which a GLWB makes the income payments, and it is generally a function of participant contributions and market activity. Often, the income base is calculated by applying a high-water mark to the participant’s TDF balance. In most cases the Income Base will generally be equal to, or potentially greater than, the participants’ TDF balance at the point of retirement. .
Income Benefit, which is a percentage applied to the Income Base, to determine a participant’s income payment. In most cases, the income benefit is around 5%.

For example, if a ~65-year-old participant has an income base of $500k, and an income benefit of 5%, then the participant would receive an income payment of ~$25k a year. The participant would access this income benefit via a two-phased process. During phase one, the participant is systematically withdrawing their own TDF assets, at a rate of ~$25k a year. If the participant completely depletes their TDF balance, then phase two begins, and the insurer will initiate the guaranteed lifetime income payments.

Importantly, during phase one, participants maintain full liquid access to their TDF balances. However, any excess withdrawal may proportionally reduce the income base, and thus the dollar amount of their income benefit.

In general, these TDFs tend to deviate in feel from non-income TDFs. For example, some impose age gates, which require participants to be invested in their age appropriate TDF, while others charge net expense ratios that are meaningfully higher than the average TDF. In general, GLWB TDFs provide relatively less optionality with respect to the income election decision, and some even automatically initiate the income benefit when the Fund reaches a certain date, and/or when the participant reaches a specific age.

In general, these TDFs could work well for plan sponsors who are less concerned with optionality and more focused on maximizing the total number of participants who receive an income benefit.

3. Lifetime Income Instrument is Offered Outside of the TDF

Lastly, some TDFs take a third approach. These TDFs simply partner with an insurance provider to make a lifetime income benefit available outside of the TDF. Generally, these will make a Qualified Longevity Annuity Contract (QLAC) available to those participants who are interested in a guaranteed lifetime income benefit.

For example, a participant contributing to their TDF and realizing market gains reaches age 65, with $500k in the TDF portfolio. Around this time, they have some period of time to determine whether to participate in the guaranteed lifetime income program.

If not, they can stay invested in the TDF, process symmetric withdrawals, and/or roll into an IRA and work with a financial advisor.

If they do want to participate, they would generally redeem some portion of the TDF, let’s say ~20% or $100k, and use this $100k to purchase a QLAC from the insurance partner. The QLAC won’t initiate payments until the participant grows closer to 80 years old.

The goal is to systematically withdraw the remaining TDF balance of $400k, to get from ~65 to ~80 years old, at which point the QLAC kicks in. Importantly, because the QLAC doesn’t pay income until the participant is ~80 years old, it generally has very attractive payout rates.

These TDFs, in general, do a fantastic job of addressing longevity risk specifically. However, some participants express discomfort with the idea of parting ways with a significant portion of their TDF balance at ~65 years old, while recognizing no benefit until they turn ~80.

At Nuveen, we applaud the objective of delivering guaranteed lifetime income, but we also believe that it needs to be properly subordinate to the broader target-date fund objective of delivering improved accumulation outcomes.

Continue reading

TIAA Institute research finds that hybrid retirement systems with integrated guaranteed income offer the best path to lasting retirement security.

Addressing the retirement conversion challenge: a global perspective

Explore now

A survey of U.S. workers reveals how financial pressures are reshaping savings behavior and what plan sponsors can do to help.

Benefits 2.0 survey: looking to the future so your participants can focus on the present

Explore now

Nuveen makes the case for embedding private market investments within target-date funds to broaden diversification and improve retirement outcomes.

The next frontier for defined contribution: embedding private assets

Explore now

*Any guarantees are backed by the claims-paying ability of the issuing company. Past performance is no guarantee of future results. Guarantees of fixed monthly payments are only associated with fixed annuities.

**The ability to annuitize is subject to plan rules. Converting/Exchanging some or all of your savings to income benefits (referred to as "annuitization") is a permanent decision. Once income benefit payments have begun, you are unable to change to another option.

There is no guarantee that an investment in a target date fund will provide adequate retirement income at or through retirement and investors can lose money at any stage of investment, even near or after the target date.

Asset allocation and diversification do not ensure a profit or protect against a loss. Be sure to see the relevant prospectus or offering document for full discussion of a target date investment option including determination of when the portfolio achieves its most conservative allocation.

Before investing, carefully consider fund investment objectives, risks, charges and expenses. For this and other information that should be read carefully, please request a prospectus or summary prospectus from your financial professional or Nuveen at 800.257.8787 or visit nuveen.com

This material, along with any views and opinions expressed within, are presented for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as changing market, economic, political, or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. There is no promise, representation, or warranty (express or implied) as to the past, future, or current accuracy, reliability or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such. This material should not be regarded by the recipients as a substitute for the exercise of their own judgment. It is important to review your investment objectives, risk tolerance and liquidity needs before choosing an investment style or manager.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or investment strategy and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with their financial advisors. Financial professionals should independently evaluate the risks associated with products or services and exercise independent judgment with respect to their clients.

This material does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction in which such solicitation is unlawful or to any person to whom it is unlawful to make such an offer. Moreover, it neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to it by making an offer to enter into an investment agreement.

This material may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields and/or market returns, and proposed or expected portfolio composition. Moreover, certain historical performance information of other investment vehicles or composite accounts managed by Nuveen may be included in this material and such performance information is presented by way of example only. No representation is made that the performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Economic and market forecasts are subject to uncertainty and may change based on varying market conditions, political and economic developments. Any changes to assumptions that may have been made in preparing this material could have a material impact on any of the data and/or information presented herein by way of example.

Important information on risk

Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the possible loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Certain products and services may not be available to all entities or persons. There is no guarantee that investment objectives will be achieved. See the applicable product literature for details.

Investors should be aware that alternative investments are speculative, subject to substantial risks including the risks associated with limited liquidity, the potential use of leverage, potential short sales, currency exchange rates, and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits.

Target Date Funds: The principal value of the fund(s) is not guaranteed at any time, including at the target-date. The value of a target date fund will fluctuate and investors may lose money. There is no guarantee the Funds' investment objectives will be achieved. For example, it may not achieve its target allocations and even if it does, the asset allocations may not achieve the desired risk-return characteristics and may result in the fund underperforming other similar funds. The target date is an approximate date when investors may begin withdrawing from the Funds. Target-date funds are actively managed, so the asset allocation is subject to change and may vary from that shown. Also, once the target date has been reached, the Funds may be merged into another with the same asset allocation or possibly another with a more stable asset allocation. For Index Funds, a portfolio that tracks an index is subject to the risk that it may not fully track its index closely due to security selection and may underperform when factoring in fees, expenses, transaction costs, and the size and timing of shareholder purchases and redemptions. Target date funds are typically fund of funds subject to the risks of their underlying funds in proportion to each Funds' allocation. These risks may include those of fixed-income underlying funds risks, such as market risk, credit risk, interest rate/duration risk, call risk, tax risk, political risk, economic risk, and income risk. Typically the value of, and income generated by, fixed income investments will decrease or increase based on changes in market interest rates. As interest rates rise, bond prices fall and as interest rates fall, bond prices rise. The Funds' income could decline during periods of falling interest rates. Income is only one component of performance and investors should consider all of the risk factors for an asset class before investing. Credit risk refers to an issuer's ability to make interest and principal payments when due, as well as the prices of bonds declining when an issuer's credit quality is expected to deteriorate. Equity underlying funds risks are subject to market risk or the risk that stocks will decline in response to such factors as adverse company news or industry developments or a general economic decline. Non-U.S. investments involve risks such as currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards.

Real estate-related assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Real estate investments are subject to various risks, including but not limited to, fluctuations in property values, higher expenses or lower income than expected, changes in economic conditions, currency values, environmental problems and liability, the cost of and ability to obtain insurance, and risks related to leasing of properties.

Private credit/debt investments, like alternative investments are not suitable for all investors given they are speculative, subject to substantial risks including the risks associated with credit risk, interest rate risk, currency risk, prepayment and extension risk, inflation risk, and risk of capital loss, limited liquidity, the potential use of leverage, potential short sales, concentrated investments and may involve complex tax structures and investment strategies. Credit risk refers to an issuer's ability to make interest and principal payments when due, as well as the prices of loans declining when an issuer's credit quality is expected to deteriorate.

Adjustable-Rate Senior Loans may not be fully secured by collateral, generally do not trade on exchanges, and are typically issued by unrated or below-investment grade companies and therefore are subject to greater liquidity and credit risk. Lower credit debt securities may be more likely to fail to make timely interest or principal payments. Rates on senior loans typically adjust with changes in prevailing short-term interest rates; therefore, when short-term rates rise, senior loan rates will rise and when short-term rates decline, senior loan rates will decline.

Real Assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Real asset investments are subject to various risks generally associated with the ownership of real estate-related assets and foreign investing, including but not limited to, fluctuations in property values, higher expenses or lower income than expected, changes in economic conditions, currency values, environmental problems and liability, the cost of and ability to obtain insurance, and risks related to leasing of properties.

In addition to traditional equity risks like market risk or the risk that company values will decline in response to such factors as adverse company news, industry developments or a general economic decline, private equity investments involve significant risks specific to the asset class, including illiquidity, long investment horizons, capital call obligations, uncertain valuations, leverage/financing risk, and dependence on successful exits. Private equity investments are not publicly traded, making them difficult to value and sell.

The information contained is about the Nuveen target date strategies overall and also contains information about the Nuveen Lifecycle Income Index Collective Investment Trust Series described later on this presentation (Lifecycle CIT Series). Please note that the Lifecycle CIT Series is not a series of mutual funds and differs in many ways from the mutual funds using a similar strategy. Information about the mutual funds or management of the mutual funds should not be automatically applied to the CIT. The Lifecycle CIT series may be referred to as "Funds" in the following disclosures.

SEI Trust Company (the "Trustee") serves as the Trustee of the Nuveen Lifecycle Income CIT Series (the "Funds") and maintains ultimate fiduciary authority over the management of, and the investments made, in the Funds. The Funds are not mutual funds. The Funds are part of a Collective Investment Trust (the "Trust") operated by the Trustee. The Trustee is a trust company organized under the laws of the Commonwealth of Pennsylvania and wholly owned subsidiary of SEI Investments Company (SEI).

The Trust is managed by the Trustee based on the investment advice of Nuveen Fund Advisors, LLC, the investment adviser to the trust.

The Trust is a trust for the collective investment of assets of participating tax qualified pension and profit-sharing plans and related trusts, and governmental plans as more fully described in the Declaration of Trust. As a bank collective trust, the Trust is exempt from registration as an investment company.

Investing involves risk; principal loss is possible. There is no guarantee the Funds investment objectives will be achieved. The participant's conversion of some or all of their fixed annuity allocation to lifetime income benefits (i.e., annuitization) is a permanent decision, and once payments have begun, participants are unable to change to another option. TIAA may offer so-called "additional amounts" or "Loyalty Bonuses." The availability and amount of any additional amounts or Loyalty Bonuses is within the discretion of TIAA, they are determined annually and are not guaranteed other than for the period for which they are declared. Certain amounts or bonuses are only available when electing lifetime income, these amounts or bonuses are also discretionary and determined annually, and their amounts can vary depending on history of contributions to the fund. The terms of TIAA's Secure Income Account (SIA) specifically require that the SIA allocation generally cannot be rebalanced downward. So, if due to financial market movements or other forces, the SIA is overweighted versus target allocation, amounts generally cannot be removed from the SIA to correct the overweighting. Instead, the overweighting generally must be corrected through new cashflows into the fund. This represents a potential opportunity cost (because it may foreclose the ability to invest in higher earning equity investments for a period of time) and could thus impact performance of the fund over time. The performance of the fixed annuity component of the fund may be benchmarked against a bond index.

There are substantial differences between fixed annuities and the bond index, including differing investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, and fluctuation of principal or return.

A plan fiduciary should consider the Funds' objectives, risks, and expenses before investing. This and other information can be found in the Declaration of Trust and the Funds' Disclosure Memorandum. The Fund is not a mutual fund, and its units are not registered under the Securities Act of 1933, as amended, or the applicable securities laws of any state or other jurisdiction.

TIAA Secure Income Account is a fixed annuity product issued through this contract by Teachers Insurance and Annuity Association of America (TIAA), 730 Third Avenue, New York, NY, 10017: Form series including but not limited to: TIAA-UQDIA-002-K, TIAA-STDFA-001-NUV and related state specific versions. Not all contracts are available in all states or currently issued. The TIAA Secure Income Account is approved for issuance in 52 of 53 U.S. insurance jurisdictions. It is not approved to be issued to New York-domiciled contract holders. Annuity contracts may contain terms for keeping them in force. We can provide you with costs and complete details. The TIAA Secure Income Account is a guaranteed insurance contract and not an investment for federal securities law purposes. Any guarantees under annuities issued by TIAA are subject to TIAA's claims-paying ability. Past performance is no guarantee of future results. Guarantees of fixed monthly payments are only associated with fixed annuities.

Nuveen, LLC provides investment solutions through its investment specialists.

Nuveen and Economist Impact, or any of their affiliates or subsidiaries are not affiliated with or in any way related to each other. The research was independently developed by Economist Impact and is sponsored by Nuveen, LLC. This material is prepared by and represents the views of Economist Impact, and does not necessarily represent the views of Nuveen, its affiliates, or other Nuveen staff.