T. Rowe's Wyatt Lee says private credit is becoming a big piece of annuities

Wyatt Lee, who heads target date strategies in T. Rowe Price's global multi-asset division and co-manages its target date portfolios, told a Goldman Sachs Asset Management media panel on Monday that private credit is becoming a big piece of the holdings inside annuities, and that this is probably a good thing. Private credit has, over the years, taken on a significant part of what traditional public capital markets had covered before, he said, which makes it a key part of the strategic asset allocation process for a portfolio built to produce retirement income.

The panel was built around the 2026 Goldman Sachs Asset Management Retirement Survey & Insights Report, which polled 5,106 Americans in July 2026 — 3,612 working individuals across generations and 1,494 retirees ages 45 to 75. Eighty-three percent said they wanted some guaranteed income in their retirement income strategy. Chris Ceder, a senior retirement strategist at Goldman Sachs Asset Management, said workers could be resistant to locking savings into annuities even as they want the guaranteed income those products provide. Getting people to understand the annuity selection is, in his telling, the harder part.

The capital that stands behind those guarantees belongs to insurers, and it has moved sharply toward private credit. Researchers at the Chicago Fed found life insurer investments in private credit reached $849 billion in 2024, more than double the 2014 figure, according to Axios. T. Rowe Price says about two-thirds of its $1.9 trillion in assets under management is tied to retirement, which puts the firm on the other side of the household decision without removing it from the argument.

The funding side has gotten more expensive. Fitch Ratings reported in mid-September that the trailing 12-month default rate for U.S. private credit borrowers hit a record 6.3% in August, up from 6.1% in July. The stress has reached retail vehicles too: Blackstone Private Credit Fund capped quarterly redemptions at 5% amid a surge in investors seeking to withdraw.

Lee's case is about who does the allocating, and the person buying the annuity is not that person. An insurer that writes a guaranteed income stream and funds it with private credit carries the credit risk on its own capital while the policyholder collects the floor — the outcome the survey's 83% said they wanted. Nobody in the poll asked for private credit. The allocation decision that delivers the guarantee sits with insurance company investment committees, and Fitch's August reading is what that funding choice costs when the credit cycle turns.

Which leaves the explanation problem Ceder named, and it is a long-running one: target date funds that embed annuities exist, but a household still has to be walked through a selection it did not go looking for. The gap between the $849 billion insurers have committed to private credit and the 5,106 people who answered the survey is where the next round of annuity product design gets decided, likely with more of the funding coming from the same place.