PGIM RETIREMENT SPENDING SOLUTIONS

American workers need help transforming their retirement plan savings into lasting income in retirement. ​

To help retirees generate an adequate income stream that will last throughout their retirement, our approach embraces the following core philosophical tenets:

1. Increased personalization can improve outcomes

As participants near retirement, their financial pictures can vary greatly. A more customized approach, that is focused 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.​

For a more personalized approach, we consider three different participant spending profiles.

Conservative Spending Profile

 

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

Moderate Spending Profile

 

For retirees 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 Spending

Profile

 

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

2. Focusing on mitigating the key investment risks faced by retirees can make retirement savings last longer​

Inflation and market drawdowns can shorten the longevity of retirement savings, derailing retirement outcomes. ​

Broad asset class diversification, including allocations to alternative asset classes, can:​

  • Shorten the length and dampen the magnitude of market drawdowns​

  • Mitigate the risk of inflation​

At PGIM, we believe allocations to alternative asset classes, like those listed below, may not only improve portfolio efficiency, but can make retirement savings last longer, by mitigating the key investment risks faced by participants. ​

  • Private real estate​

  • Commodities​

  • Infrastructure

3. A thoughtful approach including a blend of active and passive

PGIM’s approach to improving retirement outcomes includes allocating to passive underlying strategies in more efficient asset classes, while remaining active where we can more efficiently deliver potential alpha.

Learn more about the PGIM Retirement Spending Funds, which are subadvised by PGIM DC Solutions

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