Spending in Retirement
Understanding expenses in retirement and the idea of using a “Needs and Wants” framework for designing income-oriented investment solutions.
In the Defined Contribution (DC) space, there is significant debate as it relates to the appropriate investment approach to help participants build and manage retirement savings.
While there are a spectrum of solutions and many plans do not fall squarely in any one category, three broad approaches under scrutiny are:
Adopting an institutional mindset is imperative to driving successful outcome for participants, but how exactly is an Institutional Investment approach defined?
Characteristics of an Institutional
|Application Within Defined Contribution Plans|
|Outcome-oriented investments||Target-date funds, stable value, retirement income solutions, and managed accounts|
|Broad asset class diversification||Extended credit sectors, private assets, absolute return, and real assets|
|Best-of-breed investment management||Skilled investment managers that are institutional in nature|
|Thoughtful mix of active and passive||Hybrid target-date strategies and customized open-architecture funds|
|Vehicle agnostic||Institutional mutual funds, collective trusts, and separate accounts|
Here, we will make the “case” for an institutional approach from an investment, fiduciary,wellness, and fairness perspectives.
Most institutional portfolios incorporate exposures to:
PGIM does not establish or operate pension plans.