Defined Contribution Plans

Beyond Averages: A More Robust Approach to Glide-Path Design

Key inputs should reflect diversity of DC plan populations.
Key Insights

  • T. Rowe Price believes that failing to account for the heterogeneity of defined contribution participant populations in glide‑path design may lead to poor retirement outcomes.
  • Many target date providers use simple averages to represent key participant characteristics and behavioral preferences in their glide‑path models.
  • By using distributions of values within plan populations instead of averages, T. Rowe Price seeks to produce more robust target date offerings for all participants.

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Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of December 2020 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. Actual future outcomes may differ materially from any forward-looking statements made.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc.

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