IRIC's Kevin Crain says imprecise terms stall retirement income decisions

Kevin Crain, executive director of the Institutional Retirement Income Council, argues in a new paper that imprecise terminology keeps participants from evaluating retirement income products, PLANADVISER reported. The paper, "Say This, Not That: Why Language Matters in Retirement Income Planning," cites a 2013 National Bureau of Economic Research study: 72% of respondents wanted an annuity when it was described as offering payments for spending, while 21% wanted it when described as an investment.

In a LinkedIn post about the paper, Crain wrote that how the choice is framed — spending versus investing, monthly income versus account balance, partial versus all-or-nothing — "may matter even more than the terminology itself."

IRIC's Proposed Retirement Income Language Framework would make "retirement income" a category heading rather than a synonym for any particular product. A plan sponsor cannot weigh two solutions, he wrote, when providers use the same word for different structures.

Crain, who has worked as a recordkeeper, says most of the jargon originated with recordkeepers and plan providers. He suggests "monthly benefit distribution" instead of "systemic withdrawal," and points to the Defined Contribution Institutional Investor Association's 2021 glossary of decumulation terms as evidence that industry groups can agree on language. He also said he was encouraged by a recently passed federal bill awaiting President Donald Trump's signature that clarifies terminology around Social Security claiming ages.

IRIC made a related argument in August: its white paper called underspending a design flaw rather than a savings failure.