Art by Mar Hernandez

Top of the Wish List

As to possible resources employers could add to help their workers “pivot” into retirement, a guaranteed income product ranked first (67%) with employee respondents in the State Street Global Advisors 2022 Global Retirement Reality Report. Other popular choices were access to financial consulting, retirement calculators and in-person or town-hall-style education forums.

Multidimensional Saving

Retirement Income Gap

Using Bureau of Labor Statistics data to study gender pay equality, the U.S. Joint Economic Committee found that, though women comprise 47% of the workforce, they average a 21% lower lifetime income than men have, as of 2016, the most recent year for the numbers.

53%

men

47%

women

2016 Workforce

53%

men

47%

women

2016 Workforce

53%

men

47%

women

2016 Workforce

53%

men

47%

women

2016 Workforce

21%

savings gap

Women’s lifetime income

Men’s lifetime income

21%

savings gap

Women’s lifetime income

Men’s lifetime income

21%

savings gap

Women’s lifetime income

Men’s lifetime income

21%

savings gap

Women’s lifetime income

Men’s lifetime income

Time spent out of the workforce to care for children or other family members is a key contributor to the retirement saving challenge many women face. Two four-year such absences—one in mid-career and one later—can lower retirement savings by up to 35%, says the Goldman Sachs Asset Management Retirement Survey & Insights Report 2022.

35% savings gap

Women’s lifetime income with family leave

Men’s lifetime income

35% savings gap

Women’s lifetime income with family leave

Men’s lifetime income

35% savings gap

lifetime income with family leave

lifetime income

35% savings gap

lifetime income with family leave

lifetime income

C– for 529 Plan Savings?

The number of 529 college savings accounts, designed to help families prepare for the cost of college, has surpassed 16 million for the first time, according to the College Savings Plans Network. About $411 billion has been saved in 529 plans, and 38% of accounts are contributed to automatically.
Despite contribution growth and gains on account investments, 529 savings typically pay for just a fraction of a child’s college expenses. Among families that contributed to a 529 plan or other college fund, in 2020 the amount saved covered, on average, just 11% of the cost of attendance, says a report from Sallie Mae and Ipsos.

Don't Forget Gen X

65% of ­Generation Xers report being stressed about managing their retirement ­savings, says the Goldman­ Sachs Asset Manage­ment Retirement Survey & Insights Report 2022. Their time to close any savings gap narrows as many, in the prime of their career, face demands as homeowners, parents and caretakers.

The Rollover Tug of War

More than 5 million taxpayers rolled approximately $548 billion into traditional and Roth individual retirement accounts in 2019 (the latest data available from the IRS). In 2022, 42% of rollovers were to recordkeeper-affiliated IRAs, whereas 39% were to IRAs from third-party providers, says research from Hearts & Wallets. This apparent favoring of recordkeeper IRAs signifies a potential threat to the hopes of retirement advisories, which increasingly are merging or partnering with wealth management firms.

Managed Accounts

Although recordkeepers have substantially upped their offerings of managed accounts, plan participants haven’t been buying, according to the NEPC 2022 Defined Contribution Plan Trends and Fees Survey. Alison Lonstein, a principal in NEPC, attributes the slow take-up to “automatic enrollment inertia, as most are being defaulted into target-date funds. ... We expect the largest value to be for participants over age 40 with more complex life circumstances.”

Managed Account Fee Trends

• Fees are becoming more negotiable
• Some providers are offering asset-based fees with a hard-dollar cap per participant

Managed Account Availability and Uptake

TDF Market Share Accelerates