Target Date Solutions

T. Rowe Price Retirement Funds

Seeking Better Outcomes for Clients

Our Retirement Funds are designed to help your clients reach their financial goals in retirement. In the face of changing markets, our solutions combine a consistent investment approach and cutting-edge innovations to help achieve a singular goal: better investor outcomes.

Outperformance Over S&P Target Date Index

Here are three keys to our approach.

1. Strategically positioned for longer retirements

People are living longer, which means that, for many, the goal of having meaningful income throughout retirement has become harder to reach. Our research suggests that an allocation focused on generating growth in retirement accounts is one way to build a nest egg large enough to last throughout what could be a lengthy retirement.

That’s why our Retirement Funds glide path is designed with a meaningful equity allocation to help generate the growth needed to support lifetime income. And as the chart below shows, even during the 2009 market downturn, a hypothetical investment in an index portfolio using our glide-path 2010 allocations would never have dropped below that of a hypothetical investment in an approach mirroring the S&P 2010 Target Date Index. During the ensuing recovery, our higher-equity approach would have resulted in an extra $31,290 (from an original $100,000 investment).

In addition to increased life expectancy, your clients face a variety of challenges in making their retirement income last, including insufficient savings rates before retirement and uncertain spending needs in retirement (such as a medical emergency and other health care costs as they age). There’s no sense in being recklessly aggressive to try to overcome these headwinds. But if client goals include lifetime income during retirement, a calculated approach to growth should be considered.

2. The flexibility to adjust to market conditions

Our investment approach seeks to generate excess returns and minimize downside potential through three key elements: 

  • Strategic portfolio design that includes age-based equity exposure in the glide path and sector diversification
  • Tactical adjustments to our asset allocation mix based on a 6- to 18-month time horizon 
  • Active security selection in our underlying portfolios, which has been shown to add value over the long term 

As the hypothetical example below demonstrates, excess returns can compound over the life of a fund to deliver years-worth of additional income.

3. Purposeful innovation and a consistent approach

T. Rowe Price has an 80-year track record of investment management, 40 years of experience in Retirement Plan Services, and 15 years managing our Retirement Funds. With that experience comes a spirit of intentional innovation—instead of constantly changing our approach to suit the investment fad of the moment, we remain true to our robust investment process while innovating with purpose to consistently seek to improve retirement outcomes for clients. 

The evolution of our Retirement Funds has been driven by our commitment to research. We were a pioneer of substantial equity allocations in retirement portfolios to make it easier for clients to attempt to overcome longevity risk. We were the first to implement an extended glide path that continues 30 years past retirement and dynamically adjusts over a participant’s life cycle. And we recognized early on the need to provide inflation protection for long-term retirement investing and added the Treasury inflation protected securities strategy to our funds. 

These innovations were implemented only after they met the high standards of our research-focused evaluation process. 

We believe our solutions feature the most current thinking in target date investing. We subject our glide paths to thousands of economic and financial market scenarios. That means they’re constructed to weather a variety of market conditions. Financial markets are never short on surprises. While the future is always uncertain, we believe our Retirement Funds can help your clients stay on track no matter what the future holds.

Take the next step. Contact your T. Rowe Price representative to learn more about how we can help you bring your clients closer to their retirement goals.

All investments are subject to risk, including the possible loss of the money you invest. The principal value of any Retirement Fund is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The Funds' allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The Fund emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term post-retirement withdrawal horizon. The Funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The Funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility over shorter time horizons.

To obtain a prospectus for any T. Rowe Price Retirement Fund, click here.

Consider the investment objectives, risks, and charges and expenses carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, call (800) 638-8790. Read it carefully.

T. Rowe Price Investment Services, Inc.

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