2024 U.S. Retirement Market Outlook
Three Themes Shaping the U.S. Retirement Landscape
A surge in retirees and a complex market environment are creating new challenges for retirement savers. We are closely watching these themes impacting the U.S. retirement industry.
Growing demand could drive innovation and adoption of retirement income solutions.
What's changed?
Growing demand and supportive legislation could impact the landscape of in-plan versus out-of-plan solutions
What’s next?
Look for a continued innovation in product design beyond guaranteed solutions
What to keep an eye on
We're watching the adoption rates of in-plan investment and insurance income solutions
Discussion opportunities for plan sponsors and retirement professionals:
- As litigation persists, our industry experts are discussing legislation that could benefit retirees and protect plan fiduciaries.
- There are opportunities for advisors and consultants to discuss the potential cost, portability, and educational challenges of income solutions with plan sponsors who are worried about complexity.
- While guaranteed products have dominated the retirement income narrative, the demand for diverse solutions continues.
Targeted experiences can drive behavioral change and improve retirement outcomes.
What's changed?
A diverse workforce needs targeted communications and personal savings and wellness solutions
What’s next?
Financial wellness programs could be the top area for future growth in non-investment services
What to keep an eye on
The growth of personalized managed solutions can help keep assets in plan
Participants need help with financial basics, planning, and investing
The importance of workplace financial solutions to participants:
Discussion opportunities for plan sponsors and retirement professionals:
- Having access to participant-level data can help recordkeepers, consultants, and advisors unmask hidden distortions within averages and offer relevant services to participants.
- Employees put trust in their employers, but employers may need to offer personalized solutions that are otherwise only available in the retail market in order to keep retiring participants in the plan.
- Employers can use less formal settings to foster discussions about personal finance struggles or needs, which could be very useful to participants who may be more likely to engage and act if they can relate to the messenger.
A complex market environment sharpens focus on diversification opportunities.
What's changed?
Tighter monetary policy, stubborn inflation, and high interest rates require a reassessment of fixed income allocations
What’s next?
Look beyond U.S. investment grade to supplement core fixed income and consider other sectors, such as high yield, bank loans, emerging markets debt
What to keep an eye on
Active management is key for fixed income diversification
Market environment sharpens focus on fixed income
Concerns about interest rates and inflation are top of mind for plan sponsors and consultants:
Discussion opportunities for plan sponsors and retirement professionals:
- With growth of global fixed income markets, it might be time to review the investment menu for additional opportunities for diversification and potential excess returns.
- Active management is key for fixed income diversification, especially in certain fixed income sectors where credit risk is a primary risk.
Source Information:
T. Rowe Price research shared throughout this report as “our research” was compiled from the sources listed on page 13 of the full article.
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