After 21 years in the retirement income industry, I wish I could say it’s been all lollipops and roses. But that wouldn’t be true. Retirement income is a tough business—largely because there’s no universal agreement on what it even means.

At a high level, we can all agree that the mission is to generate retirement income. But what kind of income? Created by what means? Through what planning process? The answers vary depending on who you ask. Or, more accurately, they depend on which industry silo that person comes from.

​

These siloed perspectives make it difficult to reach consensus on fundamental issues—issues that shouldn’t be controversial. Take the word safe, for example. An investment advisor’s definition will likely differ from that of an insurance professional. And because these foundational views are so fragmented, changing behavior within the industry is incredibly challenging.

Efforts to merge different silos—such as integrating annuities into 401(k) plans—are ongoing, but progress is slow. I don’t see that changing anytime soon. So instead of trying to alter ingrained behaviors, we need a new approach—one that requires no change at all.

​

My message to plan sponsors, recordkeepers, advisors, consultants, and insurers is simple: Don’t change. Keep doing what you do best. But be open to technology that wraps around participant accounts to solve the problem of secure lifetime income.

​

Defined Benefit 401(k): The Return of the Defined Benefit Pension

The loss of 145,000 employer-sponsored defined benefit pension plans was a major blow. They aren’t coming back—not in their original form. But we can bring the defined benefit concept back to individuals. Millions of them. That’s the essence of Defined Benefit 401(k).

​

I’ve developed technology that transforms any investment accepting systematic deposits into an investor’s personal defined benefit pension. This is a game-changing development—one that I believe will significantly benefit asset managers, recordkeepers, plan advisors, consultants, insurers, and, most importantly, employees.

The Much-Needed Income Context

​

Bringing an income-focused context to investment vehicles that traditionally lack one is a powerful idea. Why? Because it fundamentally transforms the investment ownership experience. When income becomes the ultimate outcome, it reshapes an investor’s perception of their portfolio—giving them a clear path to true financial security in retirement.

 

How Defined Benefit 401(k) Works

The process commences with the participant making five choices that together define the parameters of the personal defined benefit plan:

1. Define the amount of retirement income

2. Choose the age at which income payments begin

3. Select how many years to invest

4. Select a payment option at retirement, and,

5. Choose a baseline growth assumption

For instance, imagine the hypothetical example of Julie, age 35. Julie makes these five choices:

1. $100,000

2. Age 65

3. 30 years

4. Life only

5. 5%

Number five, the assumed growth rate, is important. It becomes the metric by which future adjustments to Julie’s systematic contributions will be based. At the beginning of the plan, assume that Julie chooses a 5% baseline growth assumption. Based on this and Julie’s other decisions, the application calculates that she must invest $1,500 per month to reach age 65 with enough capital accumulated to purchase an annuity guaranteeing income in the amount of $100,000 for as long as she lives. Obviously, future investment performance is unknowable, Therefore, at the annual anniversary of Julie’s plan, the application recalculates how her $1,500 investment must be changed- upward or downward over the next year- to keep her on track for her desired $100,000 retirement income.

​

Assume that in year two, the actual performance of Julie’s account was 3.5%, falling short of the 5% baseline assumption. The application would generate an Annual Report advising Julie that to remain on track for the $100,0000 targeted retirement income, her monthly investment over the following year must be increased to $1,565. Julie makes the decision to increase her contribution to the suggested amount.

​

Now, assume that in year three, actual investment performance of Julie’s account was 7%, exceeding the baseline. Julie’s Annual Report would indicate that her monthly investment over the next year can be reduced to $1,480. The report also illustrates that if Julie wishes to keep her year three investment consistent at $1,565, she is now on track for a higher income, $101,560. As the $1,565 contribution level is comfortably established in Julie’s budget, she decided to leave her contribution unchanged,

​

This dynamic assessment-advice procedure (which could unfold quarterly), continues in this way until Julie reaches retirement age, when her account (or a designated portion of her account) seamlessly converts into lifetime retirement income. Defined benefit 401(k) provides Julie that she would have been entitled to had she been a worker a generation or two ago: a defined benefit pension delivering lifetime guaranteed income.

​

Transparency and Investor Empowerment

Continuous investment performance monitoring, combined with dynamic, real-time guidance, introduces a new era of transparency and investor empowerment. This technology does more than simply create a personalized defined benefit pension—it fundamentally transforms the investment experience. By embedding an income-focused perspective into traditionally static investment vehicles, it shifts their role from passive assets to active components of lifelong retirement security. This redefined ownership experience enhances the investor’s connection to their portfolio, making financial planning more meaningful and outcome driven.

​

Benefits for Plan Sponsors and Advisors

The advantages of this innovation extend beyond individual investors. Plan sponsors, advisors, recordkeepers, and even the government benefit from this paradigm shift. Employers offering this retirement solution can attract and retain top talent without the administrative burdens or financial liabilities associated with traditional pensions. Meanwhile, advisors and recordkeepers gain a more engaged participant base, leading to stronger client relationships and improved long-term outcomes.

​

On a broader scale, the societal impact of this approach is profound. By increasing participation and ensuring sustainable retirement outcomes, the defined benefit 401(k) addresses key challenges in retirement planning, paving the way for a more secure financial future for all stakeholders.

​

The Technology Behind the Solution

You may be wondering: Does the technology to create personal defined benefit plans truly exist? The answer is yes. It’s a patent-pending innovation I developed. This platform will seamlessly integrate with existing recordkeeping systems and investment platforms, allowing for smooth implementation without disrupting current retirement plan operations.

With a user-friendly interface and advanced analytical capabilities, the platform becomes an indispensable tool for participants, sponsors, and advisors alike. By simplifying the retirement planning process and providing actionable insights, the defined benefit 401(k) empowers individuals to take control of their financial future while fostering stronger collaboration among stakeholders.

​

Addressing Inflation

Education is a cornerstone of the defined benefit 401(k), equipping participants with the knowledge to make informed financial decisions. A key topic addressed is inflation’s long-term impact on purchasing power.

Take Julie, for example. She gains access to interactive digital tools that allow her to model the effects of inflation at hypothetical rates she selects. This combination of education and real-time modeling helps her understand how inflation erodes future income, creating a strong incentive to increase contributions over time. By continuously adjusting contributions to maintain purchasing power, participants like Julie strengthen their financial security—a benefit that extends to all stakeholders.

please give me a conclusion to this article:

​

Conclusion

Defined Benefit 401(k) marks a transformative step in retirement planning, merging the reliability of traditional pensions with the flexibility of modern investment strategies. By leveraging real-time performance monitoring, dynamic investment adjustments, and proactive participant education, this innovation offers an unprecedented level of transparency, security, and empowerment—features that have long been missing from defined contribution plans.

For investors, it turns their portfolios into a personalized pension, ensuring financial stability throughout retirement. For plan sponsors, advisors, and recordkeepers, it fosters stronger participant engagement, better outcomes, and a more sustainable system. And on a broader scale, it helps address America’s growing retirement security crisis, offering a path toward greater financial resilience for millions of workers.

As the retirement landscape evolves, embracing technology-driven solutions like the Defined Benefit 401(k) isn’t just an advancement—it’s an imperative. By redefining the investment experience and placing income security at the core, we have the opportunity to rebuild the promise of lifetime financial stability—not just for today’s workforce, but for generations to come.