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According to a TIAA survey reported Thursday, 51% of all employers thought their workers would prefer to receive $2,700 a month for life rather than a $500,000 lump sum at retirement. They appear to be right. An earlier TIAA study showed that 62% of employees would make the same choice.

Nonprofits in the new poll were twice as likely as corporate, for-profits to believe their employees would prefer monthly lifetime income over a lump sum.

However, the reality for employees is that few have access to guaranteed options, TIAA said.

Only 12% of the surveyed employers offered annuities as retirement income options for retirement savings. Instead, nearly a third offered target date funds and mutual funds and a fifth stable value funds — all of which, TIAA noted, rely on spending down assets and none of which create a guaranteed income stream.

(Related: 12 Best States for Retirement: 2018)

Fifty-seven percent of respondents said they expected employees to generate retirement income through systematic and lump sum withdrawals — distribution options that are not guaranteed.

Twenty-seven percent said they did not know how their employees would generate income, and just 14% expected their workers to do so from an in-plan annuity.

Nonprofit plan sponsors were likelier than their for-profit counterparts to advocate for their employees to put their savings into an investment offering lifetime income distributions at retirement.

“Retirement is a critical financial pillar in our country,” said Doug Chittenden, executive vice president and president of institutional retirement at TIAA. “We must make it easier for employers to add lifetime income options to their retirement plans, not only to help today’s employees reduce their financial risk, but to ensure the financial well-being of generations to come, and support the overall economic health of our society.”

In its statement, TIAA said it supported regulatory and legislative initiatives to make it easier for all employers to offer lifetime income options to employees.

A 2017 TIAA survey found that 71% of individuals backed legislation to make it easier for employer-based retirement plans to include lifetime income products, such as annuities, as investment options.

TIAA recently co-founded the Alliance for Lifetime Income, a nonprofit effort to help address the risk of Americans outliving their income.

KRC Research conducted a telephone survey with 1,001 plans sponsors from nonprofit and corporate, for-profit employers from March 5 to April 17.

Employers Worried Employees Won’t Have Enough for Retirement

About half of plan sponsors from nonprofit and for-profit organizations in the survey say they are only somewhat confident in their employees’ retirement futures, and a fifth purport not to be at all confident.

Ninety-one percent of respondents cited rising healthcare costs and 77% the prospect of employees outliving their retirement savings as their biggest concerns.

How are plan sponsors addressing this situation? “Surprisingly few” have created retirement plan offerings to solve these challenges, according to TIAA.

Three-quarters of employers surveyed also worried that many of their employees were not saving enough and 55% that they were choosing not to participate in a retirement plan.

Besides concern for their employees’ retirement futures, three in five respondents said budget constraints and attracting and retaining talent were also significant issues in managing their workforce.

“While plan sponsors face a number of workforce challenges, employees outliving their retirement savings is a top concern,” Chittenden, executive vice president and president of institutional retirement at TIAA, said in a statement.

“Creating a diversified retirement benefits menu that includes a lifetime income option will not only help ensure employees have enough money to cover basic expenses in retirement, it can also help alleviate the stress of rising healthcare costs.”

Improving Retirement Outcomes

While creating the right investment menu is important to improving the outlook for employee retirement, the survey revealed several opportunities for plan sponsors to consider in their effort to improve the outlook for employee retirement:

  • Analyzing workforce demographics and employee retirement for insights about employees’ demographics, behaviors and overall retirement readiness
  • Work with retirement plan providers to offer free financial advice, education and retirement planning tools to improve employee engagement and build financial literacy
  • Educate employees about healthcare costs in retirement and consider offering a retiree healthcare savings option
  • Revisit plan design and restructure the plan match formula to help increase savings

— Related: 12 Best States for Retirement: 2018