Products May 23, 2013

T. Rowe Price to Launch Suite of TDFs

T. Rowe Price filed a preliminary prospectus with the Securities and Exchange Commission (SEC) to launch 11 target-date funds (TDFs).
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The new series, called the T. Rowe Price Target Retirement Funds, is designed to pursue an asset-allocation strategy that promotes asset accumulation prior to retirement, while supporting income withdrawals over a moderate post-retirement horizon. As a result, the new series anticipates 42.5% of a fund’s assets being invested in equities at the named retirement date, compared with 55% for the firm’s existing Retirement Funds.

This suite will complement the firm’s existing lineup of Retirement Funds, which had $88.1 billion in assets as of March 31, 2013. The Target Retirement Funds are expected to be available to investors on August 22, 2013.

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“Target-date funds have become the preferred vehicle for retirement investors,” said Jerome Clark, portfolio manager of T. Rowe Price target-date funds. “We have built a successful franchise of target-date funds that are designed to support their income needs throughout retirement. The new Target Retirement Funds will allow us to expand our offerings to meet the needs of other investors who may have different objectives.”

Both the Target Retirement Funds and the existing Retirement Funds are designed to balance the primary risks investors face in retirement—market, inflation and longevity risks—but the relative importance of these factors is weighed differently in the two series. The Target Retirement series uses a glide path that places a greater emphasis on reducing market risk relative to the other risks. The new funds were not designed for investors who intend to withdraw all or a significant portion of their assets immediately at or shortly after their retirement date.

The Target Retirement series leverages many of the characteristics that have contributed to the success of the existing Retirement Funds, including the same sector diversification within the stock and bond allocations, and an identical underlying fund lineup.

A prospectus can be obtained by calling 1-800-541-8803 or by downloading one here.

Data & Research May 23, 2013

Oldest Boomers Not Extending Working Years

The first set of Baby Boomers, those born in 1946, are not necessarily "working 'till they drop," as some studies indicate.
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More than half (52%) of the 1946 Boomers are now fully retired, according to data from the MetLife Mature Market Institute. Of those, 38% say, “I’m ready,” while 17% cite health reasons and 10% attribute a job loss. Twenty-one percent remain employed full-time, 4% are self-employed, and 14% are working part-time; of those, most plan to retire fully by age 71, up from 69 in 2011.   

Figures from the MetLife Mature Market Institute show that in 2007 and 2008, just 19% of the oldest Boomers were retired, and in 2011, 45% were retired.   

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Although the majority of retirees say they have less income than when they were working, only 20% indicate their standard of living has declined. Eighty-six percent are collecting Social Security benefits; 43% began collecting earlier than they had planned.

Long-term care rose to the top of the list of retirement concerns; 31% report concern about providing for themselves or their spouses. Despite the fact they are worried about long-term care, just less than one-quarter owns private long-term care insurance.  

Eighty-two percent of the oldest Boomers want to age in one place and do not plan any future moves. Eight percent are "upside down" on their mortgage, owing more than the value of their home.  

Seventy-nine percent of the oldest Boomers have neither of their parents living, but more than one in 10 are providing regular care for a parent or older relative; for many, the level of care has increased.   

The nationally representative survey for “Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers” was conducted by GfK Custom Research North America on behalf of the MetLife Mature Market Institute between November 6 and December 23, 2012. A total of 1,003 respondents, including 447 people from the 2011 study, were surveyed by phone. Respondents were all born in 1946.  

The report can be downloaded from here.

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