A bigger share of the retirement income market at stake

BlackRock wants to capture more of the nations retirement savings dollars, and it thinks it has a product that can do just that.

At a press briefing today in New York City, the investment management firm introduced its new series of retirement income indexes aimed at helping pre-retirees convert savings into an annual income during retirement. The BlackRock CoRI Retirement Index series is specifically targeted for those aged 55 to 64 and is currently comprised of 10 U.S. bond indexes.

BlackRock executives touted its latest offering as unique in the marketplace and one that remedies the leading concern of pre-retirees: How much money can I expect in retirement?

Chip Castille, head of BlackRocks U.S. and Canada Defined Contribution Group, said the CoRI Indexes are similar to target date funds . Each index is pegged for the year in which the individual turns 65.

Specifically, the CoRI Indexes track the estimated cost of $1 in future, inflation-adjusted lifetime income. Its further constructed to converge with the median price of an annuity at age 65.

Castille said that the start age of 55 was chosen because an individual has one-quarter of his working life remaining and therefore, has time to make corrections and reach his objectives. He conceded there is tremendous movement in the indexes, but the cost of saving for retirement can be volatile. The indexes, he added, are also designed to manage volatility in a retirement savings portfolio.

Describing CoRI as an investable index, Castille said they do not provide guarantees nor are they a contract.

Launched along with the indexes was a website that enables consumers to calculate how much their current savings would provide in annual income during retirement. Or they can estimate how much they need to save to reach their yearly retirement income goal . Later this year, BlackRock plans to launch an online tool that would help individuals actually build a portfolio.

Jack VanDerhei, research director of the Employee Benefit Research Institute (EBRI), spoke at the briefing. He noted that many consumers today only guess at how much they need to save for retirement. Therefore, a tool like CoRI would be helpful in helping people decide when would be the right time to retire.

Castille said that the CoRI indexes are primarily designed for individuals saving for retirement. However, both he and VanDerhei agreed that the CoRI indexes could be useful to a 401(k) sponsor, especially in light of the current emphasis on fee disclosure.

Chuck Williams, managing director, Sheridan Road, which focuses on retirement plan consulting as well as wealth management, said most consumers dont know how to translate their assets into retirement income. But a tool like CoRI gives investors more certainty in their retirement planning process, he added.