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How BlackRock and Microsoft are attacking the retirement savings gap

BlackRock and Microsoft’s 401(k) retirement tool will include guaranteed income planning and rewards for saving, according to the head of the asset manager’s retirement group.

The technology giant and the asset manager overseeing 15 million Americans’ 401(k) portfolios are developing an app and desktop tool aimed at narrowing the widening gap between what workers will need in retirement and how much they’re saving, said Anne Ackerley in a session at SourceMedia’s In|Vest conference.

That gap expands by $3 trillion each year, Ackerley noted, for reasons relating to culture, politics and financial literacy. Social media posts celebrate spending money rather than saving it, and millions of people have no access to a 401(k), she said.

Companies “need to have a social purpose,” Ackerley said.

She continued: “Both Microsoft and BlackRock really believe that financial security and financial well-being need to be in everybody's reach, not just the wealthy. And we're putting the resources from both companies together to try to help that.”

Ann Ackerley, head of BlackRock’s retirement group
Reimagining Retirement Planning: Sebastian Dovey and Anne F. Ackerly.

The strategic partnership, unveiled in December, includes visualizations around the so-called next dollar problem, solutions on how to deal with student debt and simulations involving guaranteed income, Ackerley said.

An annuity will figure in the mix of the upcoming investment product, with Microsoft providing the technology platform, according to BlackRock spokesman Logan Koffler. The firms will begin rolling out their tool later this year, Koffler said in an email.

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Microsoft and BlackRock are also designing methods of showing workers how much extra contributions today could end up netting them in retirement, Ackerley said. Rewards for additional contributions could be as simple as confetti appearing in the app, she said.

“We've been out testing it, and I know it sounds sort of simple, but people actually reacted to it,” Ackerley said. “They liked it, and they said it might get them to do something.”

The firms are also considering monetary payments from employers to incentivize workers to sign up as part of the “whole bunch of things” that could act as rewards, she added. Ackerley expressed support for employers automatically enrolling workers in 401(k) plans and increased access to 401(k)s.

Retirement planning covers a wide range of areas, and workers need tools to assist them if they are going to achieve financial security, she said.

“This is a really hard problem,” Ackerley said. “You don't know how long you're going to live. You don't know what your expenses are going to be, particularly your medical expenses. You don't know what the rate of return is going to be in the market, and [you’re expected to] ‘hey, go figure it out.’ That's what we've sort of done.”

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