InvestmentNews: Only 12% of retirement savers have enough to last ten years or more
The article says private equity, private credit and real assets can add long-term growth, income and diversification, with retirements that may span 30 to 40 years.
At a glance
Only 12% of retirement savers have set aside enough money to last ten years or more after they stop working, according to an InvestmentNews article on private assets in defined-contribution plans.
Target-date strategies that shift toward conservative holdings as retirement nears may help reduce drawdown risk while limiting growth potential at the point when longevity risk starts to rise, the article says.
In DC plans, the article says private assets are typically integrated into professionally managed vehicles such as target-date funds and managed accounts.
Only 12% of retirement savers have set aside enough money to last ten years or more after they stop working, according to an InvestmentNews article on private assets in defined-contribution plans.
The same article puts the average retirement age at 56 and says retirements may span 30 to 40 years, a stretch the article says requires portfolios that keep generating growth long after someone leaves the workplace.
Target-date strategies that shift toward conservative holdings as retirement nears may help reduce drawdown risk while limiting growth potential at the point when longevity risk starts to rise, the article says.
The answer it proposes is private assets: private equity, private credit, and real assets such as infrastructure and real estate, which the article says can enhance diversification and bring new sources of long-term growth and income when added to a traditional DC portfolio.
It notes that more high-growth and innovative companies are staying in the private sector, delaying or avoiding public listings altogether, so a growing share of economic growth is occurring outside traditional public markets.
How private assets would enter DC plans
In DC plans, the article says private assets are typically integrated into professionally managed vehicles such as target-date funds and managed accounts.
One example it gives: a modest amount of private assets is added along the glide path of an existing target-date fund, which is then repackaged as a collective investment trust. The article's text continues into a description of what the CIT structure allows but the supplied extract stops there.
Earlier this year, the article says, ERISA issued a framework for evaluating and selecting private assets within DC plans, which the article describes as making it easier for advisers to access nontraditional investments for their retirement plan clients.
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