What is Vanguard's new 401(k) annuity offering?

Vanguard is launching a 401(k) fund in 2026 that allows participants to convert savings into an annuity for guaranteed lifetime income.

When will Vanguard's annuity option for 401(k)s be available?

The new Vanguard 401(k) fund with an annuity option will be available starting in 2026.

What are the benefits of annuities for retirement income?

Annuities offer guaranteed income, potential growth opportunities, and tax advantages, helping secure retirement finances.

Home / Business and Economy / Vanguard Offers Annuity Option in 401(k)s

Vanguard Offers Annuity Option in 401(k)s

9 Dec

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Summary

Vanguard's new 401(k) fund, available in 2026, allows savings conversion to an annuity.
Annuities offer guaranteed retirement income and tax advantages.
Annuity sales reached a record $119.2 billion in Q2 2025.

Vanguard Offers Annuity Option in 401(k)s

Vanguard is set to introduce a new 401(k) target date fund in 2026, designed in collaboration with TIAA. This innovative product will enable participants, particularly older workers, to convert a portion of their retirement savings into a guaranteed annuity income stream.

This move comes as annuities gain significant traction in the market, with U.S. sales reaching an all-time high of $119.2 billion in the second quarter of 2025. Annuities are financial instruments that provide a predictable income, often for life, and offer potential tax deferral on earnings.

While annuities promise security against outliving savings and can mitigate concerns about market volatility, potential investors must carefully evaluate their complexity, associated fees, and whether they align with individual financial goals and risk tolerance.