2025: Innovating Retirement Strategies
My wife has opened my eyes to many wonderful things. “Sunday sauce” is top of the list but a close second would be Nora Ephron movies. I find myself regularly thinking about a particular exchange between Meg Ryan and Tom Hanks in “You’ve Got Mail” after Tom puts Meg’s bookstore out of business:
Joe [Tom Hanks]: “It wasn’t personal; it was business.”
Kathleen [Meg Ryan]: “What is that supposed to mean? I am so sick of that. All it means is – – it’s not personal to you, but it’s personal to me, it’s personal to a lot of people. What’s wrong with personal anyway?”
Joe: “Nothing.”
Kathleen: “I mean, whatever else anything is, it ought to begin by being personal.”
I have always found motivation and purpose in the personal implications of being in the business of managing retirement investments. Behind every retirement dollar is an individual working towards a personal goal and we are committed to helping them on that journey. This is especially true in volatile environments when savers should be educated and empowered to make informed decisions. (See With Crisis Comes Opportunity: The Importance of Participant Outreach During Hard Times.)
The clearest demonstration of the impact we can make is Target Date Fund investing, which has materially improved upon money market or stable value funds as a default option by providing a more complete asset allocation. Using the S&P TDF 2040 Index and the Bloomberg Stable Value Benchmarks as an example, a 30-year old in 2005 would have lost out on nearly 250% in gains by investing in a Stable Value fund over a TDF over the last twenty years.*
Over that same time period, private market investments and investment vehicles such as the ETF have taken market share from public market investments and mutual funds. These changes have ramifications on the retirement business and a personal impact on American workers. At State Street, we have conviction in our twenty-year heritage of managing index target date funds and are proud to share how our commitment to innovating solutions reflects the changing markets and ways American workers invest.
- Driving Access to Private Markets: We are constantly innovating to bring to market a transparent, sophisticated solution pairing thoughtful glidepath design, broad exposure to public markets, and a dedicated private markets allocation for investors seeking greater diversification and excess return. Read why the time is right for target date constructs to include this fast-growing asset class here.
- Expansion of Retirement Income Solution: IncomeWise target date strategies soon will be available on the Fidelity and Voya Financial recordkeeping platforms. IncomeWise blends the simplicity of traditional index-based target-date funds with the option for participants to activate income across part or all of their target-date fund balance. Through a simple two-step election process, participants can choose to activate two integrated income features: deferred annuity payments for lifelong security, and automatic monthly withdrawals that provide a structured spend-down option. This combination offers both flexibility and longevity protection, helping participants create a retirement income strategy that aligns with their needs.
You’ve Got Mail is a classic and worth revisiting. It’s also a good reminder that time doesn’t stand still as the movie is centered around competing bookstores and dial-up internet. At State Street, we remain grounded in the personal, but committed to driving forward innovative solutions at the pace of participant needs. I welcome an opportunity to talk to you about these solutions, or other ways we can meet the needs of your participants.
Brendan Curran
Head of US Retirement