Income by Design

For many, retirement planning still centers around reaching a target account balance. But as retirement draws closer, that approach often falls short of answering the real question: How will I actually live on this money?

Erin Culek, Guardian’s Head of Financial Protection and Retirement Solutions, speaks with Nick Nefouse, BlackRock’s Global Head of Retirement Solutions and Head of LifePath, about why retirement success now depends less on accumulation and more on income, certainty, and behavior. Their discussion explores why people underspend in retirement, how guaranteed income can change decision-making, and why an outcomes-based, or “whole-portfolio,” approach is increasingly essential for better outcomes.

Erin: BlackRock has conducted extensive research on retirement in America. What are the primary takeaways from what you’ve learned?

Nick: There are three main misunderstandings about retirement we see. First, people tend to focus on how much wealth they’ll have at a certain age, rather than how they’re actually going to fund spending in retirement. That disconnect becomes most obvious when people shift from saving to spending. It’s where confidence can break down, and underspending can occur, even when balances look strong.

Second, we as an industry talk a lot about longevity risk, but most people don’t understand it and don’t want to talk about their own mortality. What actually resonates is certainty. Telling someone they’ll have a paycheck for the rest of their life is much more meaningful than telling them how long they might live. This is why outcomes-based whole-portfolio planning is so important. Prepare people for what they care about: reliable income they can plan around, and then build the rest of the strategy from there.

Third, retirement isn’t a single date. It’s a window of time. We treat it like a graduation, but in reality many people retire earlier than they planned for reasons outside their control, like health, a spouse’s health, or workforce changes. Planning for flexibility and stress‑testing different retirement start dates help ensure people are ready even if retirement happens sooner than expected.

Erin: You used the phrase “whole-portfolio planning.” What does that mean in practice, and why does it matter, particularly for high-net-worth individuals?

Nick: Whole-portfolio planning starts with the outcome, not the product. The question isn’t “Should I or shouldn’t I use insurance?” It’s “What outcome am I trying to achieve, and how do I structure the entire portfolio to support that?” Insurance, investments, and fixed income aren’t good or bad on their own. Used the right way, they improve outcomes. Used poorly, they don’t.

For most high-net-worth individuals, the goal isn’t to maximize wealth at all costs. It’s to maintain quality of life and grow above inflation. At that level, the biggest risk is a large downside event that changes behavior. Insurance and annuities are particularly powerful because they help manage left tail risk, meaning the truly catastrophic outcomes. By reshaping risk, whole-portfolio construction allows people to stay invested, stay disciplined, and focus on durable outcomes instead of short-term volatility.

Erin: You’ve said the transition from saving to spending is where many people struggle. Where does that break down?

Nick: We don’t educate people on spending. We educate them on saving, and the entire system reinforces that more money is always better. That creates unintended consequences. People anchor to the high-water mark in their portfolio, and when markets move, behavior changes. Someone may feel comfortable spending based on a portfolio at its peak, but when the market drops, they often cut spending or delay retirement decisions because they feel like they’ve “lost” money, even if the plan is still workable long-term.

We also over-index on wealth maximization instead of outcomes as the goal. When portfolio values fall, people feel worse and spend less, even if their ability to fund retirement hasn’t actually changed. That’s why reframing matters. If you could show people something like a funded status, or how close they are to meeting their retirement income goal, it would be far more useful than just showing an account balance.

Erin: And you’ve spoken about how much people underspend in retirement. Why does that happen?

Nick: People underspend because they don’t know how to spend. There’s a real scarcity mentality in retirement. There’s a fear of running out of money. And that fear leads people to significantly underspend. The issue isn’t that people die with money; it’s that they don’t enjoy their retirement, because they’re uncertain.

Guaranteed income inherently helps change that. When people know a portion of their income is secure, they’re more comfortable spending. They can budget. They can plan. It gives them confidence, and that confidence changes behavior in a very real way.

Erin: Despite that, guaranteed income adoption remains low. What’s holding people back?

Nick: This isn’t a product problem. It’s a narrative problem. If you talk to people in retirement who have guaranteed income and ask them what they want, they’ll say more guaranteed income. If you ask people who don’t have it, they’ll say they want it. But if you ask people in their late 50s or early 60s whether they want an annuity, they’ll often say no due to misconceptions.

There’s a disconnect there. When people understand the guaranteed income that annuities provide allows them to spend more confidently in retirement, the conversation changes. We need to continue telling that story.

Erin: How do you see the role of advice evolving as people approach retirement?

Nick: Advice is critical. And honestly, the more technology we use, the clearer that becomes. While models, algorithms, and digital tools can provide information and recommendations at scale, most decisions aren’t driven by technology alone. They’re driven by someone they trust telling them it’s okay. You can read the same information on a screen, but hearing it from a human changes behavior.

We see this very clearly when it comes to income solutions and insurance. When advice is present, adoption is dramatically higher. It’s not because the information is different. It’s because someone is there to provide context and reassurance.

Erin: What about small business owners, who often don’t have access to traditional retirement plans?

Nick: Access matters a lot. When people have access to well-designed retirement solutions — diversified, low-cost, professionally managed — the outcomes are actually quite good.

For small business owners, simplicity and structure are critical. Solutions that handle allocation, rebalancing, and the transition from accumulation to income can make a real difference, especially when paired with advice.

Erin: Looking ahead, how do you think retirement planning will evolve over the next decade?

Nick: I think you’ll see income and protection become more embedded in retirement planning, rather than treated as optional or separate decisions.

More broadly, the industry is moving toward holistic planning, where investments, insurance, and income are considered together. When people have more certainty, they make better decisions. They stay invested longer. And they experience retirement with far less anxiety.

Erin: Final takeaway. What should clients and advisors focus on?

Nick: Retirement planning isn’t about hitting a number. It’s about creating certainty. When you focus on outcomes and use the whole portfolio, including guaranteed income, to support those outcomes, you give people the confidence to actually live their retirement. And that’s what matters most.

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Retirement, designed around life