Retirement Strategies In 2024 Focus On Flexibility And Income

T. Rowe Price’s new 2024 Defined Contribution Consultant Study highlights significant shifts in retirement planning strategies, particularly when it comes to personalization and retirement income.

The study, which surveyed 35 leading firms, reveals that consultants, advisors, and plan sponsors have significantly shifted their strategies and priorities over the last few years.

A striking change since 2021 is the increased engagement with retirement income strategies. In 2021, 59% of consultants and advisors reported that over half of their plan sponsor clients had no clear stance on retirement income. By 2024, this figure plummeted to 19%, indicating a growing prioritization of retirement income in plan offerings.

Jessica Sclafani, global retirement strategist at T. Rowe Price, notes that consultants and advisors are seeking “solutions that offer choice, personalization, flexibility and are cost-effective.” The study shows a preference for simple, systematic withdrawal capabilities as the most appealing strategy for delivering income to retired participants.

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Personalization, especially for near-retirees, emerged as a key theme. Managed accounts are gaining traction as opt-in investment options, though target date funds remain the predominant default investment alternative. The study also reveals strong support for transitioning from mutual fund-based target date solutions to collective investment trusts, primarily for cost efficiency.

Fixed income strategies have evolved in response to post-pandemic interest rate increases. The study reports that 89% of respondent firms now prioritize diversification opportunities, up from 48% in 2021. There’s also growing support for non-traditional bond allocations within target date solutions, with active management favored in high-yield bonds and emerging markets debt.

The research anticipates growth in in-plan emergency savings programs, with 70% of firms expecting such offerings to become more common within the next three to five years.

These findings underscore a significant shift in the retirement planning landscape, with increased focus on personalized, flexible, and cost-effective solutions to meet the evolving needs of plan participants across different life stages.

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