Bank of America’s Innovative Approach to Retirement Savings
One of the most significant challenges many Americans face is not only saving enough money for retirement but also figuring out how to convert these savings into a steady income. According to Jeff Clark, head of defined contribution research at Vanguard, “Turning retirement savings into a reliable income stream is one of the biggest challenges Americans face in retirement.”
Addressing this issue, Bank of America has launched a new product, the 401(k) Pay, a digital hub designed to help customers manage their retirement funds more efficiently. This innovative app is accessible through the Bank of America’s website and mobile app and provides a consolidated platform for retirees to make informed decisions regarding their savings.
How Does 401(k) Pay Work?
The 401(k) Pay, as explained by John Quinn, Bank of America’s managing director of workplace benefits product, “introduces a whole suite of tools at a very critical point in that journey for an individual, which is planning for and modeling how the income will get generated from the assets they saved in their 401(k).”
The app enables users to check their 401(k) balances, decide where to deposit withdrawals – including at banks other than Bank of America – and account for expenses like taxes and cost-of-living adjustments. As the user makes these decisions, the app calculates how much income will be generated each week, month, or year. The customer then sets the timing and size of their disbursements and has the option to recalibrate later or simply set it and forget it.
Addressing the Retirement Savings Challenge
A study by Vanguard pointed out that many Americans struggle to create a steady, sustainable retirement income. The study revealed that 23% of seniors with Vanguard retirement plans cashed out their entire accounts upon retirement. Of those who made yearly withdrawals, only 20% took out a consistent, moderate disbursement.
Bank of America’s 401(k) Pay aims to help individuals avoid common mistakes such as underestimating longevity risk, failing to account for inflation, mismanaging withdrawal rates, and poor tax planning. All these factors can lead to significant pitfalls as individuals transition from their working years into retirement.
Helping Employees to Generate Income in Retirement
A key motivation for creating the app was feedback from both employers and employees. According to a 2025 Bank of America study, 33% of about 1,000 U.S. workers surveyed wanted help learning how to generate income in retirement. The bank’s commercial clients also expressed similar concerns, with many employees nearing retirement and grappling with questions about their future financial stability.
Can Retirement Apps Help?
While Bank of America is not the only institution to offer a mobile app for managing retirement plans, its new product stands out due to the advice it provides to its customers. The app gives recommendations, guidance, and nudges to help users make the most of their retirement savings.
Vanguard’s Jeff Clark believes that digital tools and advice can indeed help bridge the gap by providing a centralized hub for planning, integrating savings projections, withdrawal strategies, and tax considerations. He stated, “Digital platforms can offer personalized guidance and scenario modeling, helping participants to retire confidently.”
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