If you’ve ever skied down a mountain, you know the ski lift is the only way up. It’s an easy decision. If you want to ski, you take the ski lift. You don’t have to do much more.

It’s like participating in a defined contribution (DC) plan. Just enroll and, like a ski lift, a well-designed plan gets you safely to retirement.

But once you’re at the top of the mountain you have no choice but to go down, and there are different trails you can take. It’s thrilling to stand there, wind whipping at your back as you peer down the mountain or across the horizon! But it can also be scary.

More and more of your participants are nearing retirement, putting them in a similar situation. They’re gathering at the top of the mountain, looking down, and asking themselves, “What do I do next?”

Should I roll out of the plan? How should I be invested? Should I buy an annuity? How much should I take each month? How long will I need my income to last? And how in the world does Social Security fit in?

You can help your participants answer these questions by ensuring your plan is “retiree-friendly.” Participants benefit from your fiduciary oversight. The rigor you take with their best interests in mind creates a safe haven of sorts. And you can be more confident that your longtime employees are in good hands during retirement.

Retiree-friendly plan designs

What does it take to be a retiree-friendly plan?

  • Eliminate age restrictions. If your plan has a force-out provision at a certain age, consider updating your plan rules to allow retirees to stay in your plan.
  • Allow installments. Payments can be based on a percentage or can be fixed-dollar.
  • Allow for partial withdrawals with no dollar or frequency limitations. Without this feature, any withdrawal would force a participant to leave the plan.
  • Allow rollovers of outside retirement assets into your company’s plan. This feature is only offered by a handful of companies, but it allows retirees to take full advantage of your plan’s key benefits and is also helpful with defined benefit (DB) lump sums.
  • Offer advice and guidance. Retirees have complex needs. Many have saved outside of the plan, often resulting in multiple sources of retirement income, including Social Security, spousal accounts, IRAs, taxable savings, and, in some cases, DB plans. These participants need sound advice and education to navigate what could be the most complex financial stage of their lives. Managed accounts can do just that and at a reasonable price.

At Vanguard we offer a service called Income+ through our Managed Account Program. It’s automatically available at no extra cost, but it must be adopted by the plan sponsor. We partner with Financial Engines, a third-party registered investment advisor to deliver the service.

This unique service is focused on your participants’ income needs. It uses your plan’s current lineup to create a tailored portfolio using a liability-driven, DB-like approach. The result is a steady payout throughout retirement.

Together, the plan design features listed above can help get your participants safely down the mountain.

If you have questions on plan design, our experts can help. Please don’t hesitate to reach out and consult with your Vanguard team.


  • Financial Engines is a trademark of Financial Engines, Inc.
  • The Vanguard Group has partnered with Financial Engines Advisors LLC to provide subadvisory services to the Vanguard Managed Account Program and Personal Online Advisor. Financial Engines Advisor LLC is an independent, federally registered investment advisor that does not sell investments or receive commission for the investments it recommends. Advisory services are provided by Vanguard Advisers, Inc. (VAI), a federally registered investment advisor and an affiliate of The Vanguard Group, Inc. (Vanguard). Neither Vanguard, Financial Engines, nor their respective affiliates guarantee future results.
  • All investing is subject to risk, including the possible loss of the money you invest. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
  • There are important factors to consider when rolling over assets to an IRA or an employer retirement plan account, or when leaving assets in an employer retirement plan account. These factors include, but are not limited to, investment options in each type of account, fees and expenses, available services, potential withdrawal penalties, protection from creditors and legal judgments, required minimum distributions, and tax consequences of rolling over employer stock to an IRA.