Glide Path Design

Evolution With Purpose

Kim DeDominicis, Portfolio Manager, Multi-Asset
Lorie Latham, CFA, Senior Defined Contribution Strategist

An Informed, Research-Based Approach to Better Retirement Outcomes

Key Insights
  • Glide paths underlying target date solutions must represent multiple life-cycle phases leading up to and through a participant’s retirement because they are the most commonly used qualified default investment alternative in defined contribution plans.
  • There is value in evolving the way glide path strategies are assessed relative to the evolving retirement needs of participants.
  • It is equally valuable for plan sponsors to consider the multiple forms of “risk” that are present within the retirement life cycle and to understand the corresponding trade-offs of mitigating each of these risks.
  • Taking the time to assess the relative importance of each phase of a glide path will allow plan sponsors to understand the proportional impact on outcomes for retirement savers.
  • Evolving the glide path assessment process may help plan sponsors ensure that target date products and their glide paths are well understood and chosen in accordance with their plans’ long-term goals and their participants’ retirement needs

The role of a plan sponsor requires decision-making that has a critical impact on the retirement outcomes of their participants. These decisions require careful evaluation that is both complicated, and vital to get right. Recent T. Rowe Price research indicates that plan sponsors have a sharpened focus on delivering better retirement outcomes for participants. Last year, we published a paper called “Three Questions Today for Better Outcomes Tomorrow” to begin to distill the complex evaluation process of assessing a qualified default investment alternative (QDIA) solution into a few key questions.

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Important Information:

This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide fiduciary recommendations concerning investments or investment management; it is not individualized to the needs of any specific benefit plan or retirement investor, nor is it directed to any recipient in connection with a specific investment or investment management decision. T. Rowe Price group of companies, including T. Rowe Price Associates, Inc., and/or its affiliates, receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation, or a solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

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