Our Retirement Funds are designed to help your clients reach their retirement goals. 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.
Here’s how we’ve delivered on this objective and the keys to our funds’ success.
Results that can make a difference
Celebrating 18 years of strong performance, the Retirement 2020 Fund, designed for investors retiring this year, is the top ranked fund among its Morningstar peers for the 10- and 15-year periods ending 3/31/21.* The fund has a long history of delivering better outcomes for clients.
In fact, 100% of our Retirement Funds with a 10-year record have outperformed their benchmark:
3-Year performance figure reflects the aggregate performance of the Retirement 2005 through Retirement 2060 Funds. 5- and 10-Year performance figures reflect the aggregate performance of the Retirement 2005 through Retirement 2055 Funds.
T. Rowe Price Retirement Funds have received the Gold Analyst Rating by Morningstar, their highest rating offered.**
Retirement 2005-2060 Funds Investor Class and Retirement I Funds Class, as of 2/19/21 Morningstar US Fund Target Date Category.
Three keys to our approach
1. Strategically positioned for longer retirements
People are living longer, which means for many, the goal of having sufficient 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 to last.
That’s why our Retirement Funds glide path is designed with a meaningful equity allocation to help generate the growth needed to help support lifetime income. And as the chart below shows, even following market downturns—such as the 2008-2009 global financial crisis and recent volatility from the coronavirus pandemic—a hypothetical investment in the Retirement 2020 Fund would still be better off than a hypothetical investment in an approach mirroring the S&P Target Date 2020 Index. During the ensuing recovery, our higher-equity approach would have resulted in an extra $101,438 (from an original $100,000 investment).
Our approach can mean more money in retirement, even after accounting for periods of volatility.
As of March 31, 2021
For standardized returns and other information about the fund, click here.
Performance data quoted represents past performance and is not a reliable indicator of future performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance, please click here.
Chart shows growth of 100,000 USD invested in the T. Rowe Price Retirement 2020 Fund and the S&P Target Date 2020 Index on September 30, 2002.
Figures include changes in principal value with dividends reinvested. The 2020 vintage is shown for illustrative purposes to represent a portfolio at target retirement. Investors cannot invest directly in an index.
Source: S&P Indices. See Additional Disclosures for more information on the source.
In addition to living longer, your clients face a variety of challenges, such as insufficient savings, health care, and other unexpected expenses that can impact their retirement income. We believe a long-term approach—focused on generating sufficient retirement savings while providing diversification and managing risks—can contribute to a client’s goal of lifetime income in retirement.
2. Flexibility to adjust to market conditions
Our investment approach seeks to generate excess returns and minimize downside potential through three 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 shows, excess returns can compound over the life of a fund to deliver years-worth of additional income.
Past performance cannot guarantee future results.
Results will vary for other periods, and all funds are subject to market risk.
The results shown above are hypothetical, do not reflect actual investment results, and are not a guarantee of future results. Hypothetical results were developed with the benefit of hindsight and have inherent limitations. Hypothetical results do not reflect actual trading or the effect of material economic and market factors on the decision-making process. Results do not include the impact of fees, expenses, or taxes. Results have been adjusted to reflect the reinvestment of dividend and capital gains. Actual returns may differ significantly from the results shown. The demographic assumptions, returns, and ending balances are shown for illustrative purposes only and are not intended to provide any assurance or promise of actual returns and outcomes.
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 18 years of experience managing our Retirement Funds. With that experience comes a spirit of intentional innovation—instead of changing our approach to suit the investment fad of the moment, we remain true to our process while innovating with purpose to consistently seek better retirement outcomes.
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.
- 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.
Put our history of strong performance to work for you and your clients
The Retirement 2020 Fund has a history of strong performance. With a track record spanning 18 years, clients who invested in the fund when it launched have had a substantial amount of time to benefit from our outcomes-driven approach. We designed our glide path to help investors accumulate the assets needed to help support income throughout retirement.
The T. Rowe Price Retirement 2020 Fund ranked #1 among its Morningstar Peer group for the 10- and 15-year periods ending 3/31/2021.*
These strong results are a testament to our target date process and people—and the rewards of a long-term focus. Over time, you can see the strong performance our full lineup of Retirement Funds has delivered.
Retirement Funds Morningstar Rankings
As of March 31, 2021
Past performance cannot guarantee future results.
*Results will vary for other periods, and all funds are subject to market risk. Rankings are based on total returns for the time period shown, versus all funds in the corresponding Morningstar categories, as applicable. The highest (or most favorable) percentile rank is 1st, and the lowest (or least favorable) percentile rank is 100th.
S&P Indices are products of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and have been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by T. Rowe Price. The fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Indices.
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.
Morningstar Analyst Rating Methodology
**Gold Ratings apply to the Investor Class and Retirement I Fund Class of the funds as of February 19, 2021. Analyst Ratings for other share classes or other T. Rowe Price target date series may differ. The 2065 vintage has not been rated due to its limited history.
The Morningstar Analyst Rating™ is not a credit or risk rating. It is a subjective evaluation performed by Morningstar’s manager research group, which consists of various Morningstar, Inc. subsidiaries (“Manager Research Group”). In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission. The Manager Research Group evaluates funds based on five key pillars, which are process, performance, people, parent, and price. The Manager Research Group uses this five-pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark over the long term on a risk adjusted basis. They consider quantitative and qualitative factors in their research. For actively managed strategies, people and process each receive a 45% weighting in their analysis, while parent receives a 10% weighting. For passive strategies, process receives an 80% weighting, while people and parent each receive a 10% weighting. For both active and passive strategies, performance has no explicit weight as it is incorporated into the analysis of people and process; price at the share-class level (where applicable) is directly subtracted from an expected gross alpha estimate derived from the analysis of the other pillars. The impact of the weighted pillar scores for people, process and parent on the final Analyst Rating is further modified by a measure of the dispersion of historical alphas among relevant peers. For certain peer groups where standard benchmarking is not applicable, primarily peer groups of funds using alternative investment strategies, the modification by alpha dispersion is not used.
The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. For active funds, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that an active fund will be able to deliver positive alpha net of fees relative to the standard benchmark index assigned to the Morningstar category. The level of the rating relates to the level of expected positive net alpha relative to Morningstar category peers for active funds. For passive funds, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that a fund will be able to deliver a higher alpha net of fees than the lesser of the relevant Morningstar category median or 0. The level of the rating relates to the level of expected net alpha relative to Morningstar category peers for passive funds. For certain peer groups where standard benchmarking is not applicable, primarily peer groups of funds using alternative investment strategies, a Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s expectation that a fund will deliver a weighted pillar score above a predetermined threshold within its peer group. Analyst Ratings ultimately reflect the Manager Research Group’s overall assessment, are overseen by an Analyst Rating Committee, and are continuously monitored and reevaluated at least every 14 months.
The Morningstar Analyst Rating (i) should not be used as the sole basis in evaluating a fund, (ii) involves unknown risks and uncertainties which may cause the Manager Research Group’s expectations not to occur or to differ significantly from what they expected, and (iii) should not be considered an offer or solicitation to buy or sell the fund.
© 2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Morningstar Outstanding Portfolio Manager Award Methodology
To be eligible for the Outstanding Portfolio Manager award, managers must run one or more investment strategies that are under Morningstar manager research analyst coverage and the manager's strategy must currently earn a Morningstar Analyst RatingTM of Gold or Silver for at least one vehicle and/or share class.
Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they viewed as an assessment of a fund's, CIT's, or separately managed account's underlying securities' creditworthiness. This material is for informational purposes only; references to securities or a separately managed account investment strategy in this material should not be considered an offer or solicitation to buy or sell the securities or to invest with that strategy.