PGIM RETIREMENT SPENDING PORTFOLIOS

A WELL-DIVERSIFIED, MORE PERSONALIZED, LOW-COST RETIREMENT INCOME SOLUTION

American workers need help transforming their retirement plan savings into lasting income in retirement. At PGIM DC Solutions, we believe that more broadly diversified portfolios, which focus on each participant’s unique retirement spending needs and income sources, can help retirees turn their retirement plan savings into a lasting retirement income stream. Additionally, the PGIM Retirement Spending Portfolios offer a more personalized solution, filling the gap between the one-size-fits-all nature of target-date funds and fully-personalized solutions, like managed accounts.

KEY FEATURES

The risks faced by retirees are likely different from those who are still working.

In addition to allocating to traditional asset classes, the strategies allocate to the following non-traditional asset classes that help better mitigate the risks of inflation, equity market volatility, and the longevity of retirement assets for those approaching retirement.

These asset classes include:

  • Commodities
  • Real estate
  • Global infrastructure

As participants near retirement, their financial pictures can vary greatly. A more customized approach, that is focused specifically on each participant's unique retirement spending needs and sources of income can improve retirement outcomes.

  • Spending - While some participants rely on DC plan savings to cover all of their essentials or “Needs” in retirement, others may be able to use plan savings on a variety of non-essential items or “Wants”
  • Sources of income - Some participants may have secure income (like a defined benefit plan) to cover their Needs in retirement, while others with less secure income have less flexibility around how to spend DC plan savings

By allocating to passive underlying strategies in more efficient asset classes, while remaining active where we can more efficiently deliver potential alpha, the PGIM Retirement Spending Portfolios aim to keep expenses low.

The portfolios may be significantly less expensive than other retirement income solutions available in the marketplace.

THREE PORTFOLIOS, DESIGNED FOR DIFFERENT PARTICIPANT SPENDING PROFILES

Our set of three PGIM Retirement Spending Portfolios—designed for individuals near and in retirement—seeks to provide a unique balance by mitigating the risk of equity market volatility and inflation while offering the opportunity for growth.

Conservative

For investors who are generally less well funded and are dependent on retirement plan savings to fund essential spending in retirement.

Moderate

For investors who may use retirement plan savings for some of their essential spending needs but have access to other sources of secure income that allows them some flexibility.

Enhanced

For investors who have other sources of secure income in retirement (like a defined benefit plan) and have significant flexibility around their retirement savings.

RETIREE SPENDING

  • Retirees do not spend the same amount every year. Spending needs change year by year, and capital markets change as well, impacting how much a retiree can safely expect to spend.
  • The following table shows PGIM’s Guided Spending Rates for varying levels of spending flexibility – conservative, moderate, and enhanced – for various retirement horizons. These portfolio withdrawal rates consider the dynamic nature of retiree spending and are updated quarterly in response to changing capital markets. 

 

PGIM’s Guided Spending Rates

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Source: PGIM DC Solutions calculations and PGIM Quantitative Solutions CMAs as of Q4 2024.
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Source: PGIM DC Solutions calculations and PGIM Quantitative Solutions CMAs as of Q4 2024.

FEATURED INSIGHTS

 Webinar

Guided Spending Rates: Rethinking “Safe” Initial Withdrawal Rates (May 2024)

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 PGIM RETIREWELL™

Our solutions focus on two principal goals of an individual: financial security and well-being, and the ability to meet financial goals and enjoy financial freedom in retirement.

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