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THE NEW RETIREMENT REALITY

Defined Contribution Quarterly 4Q 2022

October 20, 2022  |  7 Minutes Read


Quarterly Snapshot

Target date fund flows for the quarter were in line with previous quarters, while plan participants continue to seek lower market volatility in money market funds during challenging market conditions. Year-to-date, active manager outperformance generally has been seen in US equities, most pronounced in large cap and small cap value.

 

 

Net Target Date Fund Investment Flows

 

Source: Strategic Insight, Simfund as of September 30, 2022; For open-end mutual funds only.

 

 

Net New Investment Flows

 

Source: ICI “The U.S. Retirement Market, Second Quarter 2022,” released September 2022.

 

 

Asset Class Performance

 

Source: Morningstar, as of September 30, 2022. Performance is annualized for periods greater than one year. Past performance does not guarantee future results, which may vary.

 

 

Active Management Performance

 

Source: Morningstar, as of September 30, 2022. Net of fees.

 

 

In Focus: Navigating the Financial Vortex 

Investors face a complex backdrop due to rising interest rates and market volatility, creating a challenging environment to generate sustainable income, and causing a strain on one’s finances.

 

This year’s Retirement Survey & Insights Report, Navigating the Financial Vortex: From Retirement Readiness to Retirement Income, highlights these hardships and considers possible paths forward. Our report explores the diverse needs of two key audiences: those still working and those who have already retired. 

 

Our findings are from 1,566 individuals surveyed in July and August 2022 and provide insights from a diverse set of perspectives, including (i) working individuals (967 working individuals across generations – working Baby Boomers, Generation X, Millennials, and Generation Z), (ii) retired individuals (599 retired individuals (age 50-75)), and (iii) gender and generational breakdowns for both populations. 

 

Learn more with our full report.

 

 

1,566 Total Respondents

 

Source: Goldman Sachs Asset Management's Retirement Survey & Insights Report 2022, published October 2022.

 

 

 

By the Numbers 

Source: Goldman Sachs Asset Management's Retirement Survey & Insights Report 2022, published October 2022.

 

 

The infographic summarizes important statistics from the Retirement Survey & Insights Report 2022. Learn more about stress levels, top challenges and concerns from working individuals and retirees.

 

Learn More

 

 

 

Key Survey Findings

 

Realities of Retirement

More than half (51%) of retirees report their current income is less than 50% of their pre-retirement income.

Reaching retirement with sufficient savings is a challenge that is only getting more difficult for working generations. Unfortunately, many fall short of the savings they need to generate income for a comfortable retirement.

 

 

The Forgotten Generation

A significant portion (65%) of Generation X are stressed about managing their retirement savings and over 50% feel they are behind schedule with their savings.

Generation X is often viewed as the forgotten generation, bridging Boomers and Millennials, and can be overlooked when addressing the financial challenges each generation must navigate. Now they face a tumultuous macroeconomic backdrop as their time to close any savings gap continues to narrow.

 

 

Top Concerns

Inflation and Generating Retirement Income Are the Top Concerns For Retirees.

Retirees face a confluence of factors in retirement that can affect their ability to generate income. They report that they are most concerned about inflation (71%), meeting future healthcare needs (51%) and potential reductions in Social Security (46%).

 

 

Growing Appetite for Advice

Nearly all working respondents (95%) believe financial help is important to prepare for retirement.

The challenges with saving for retirement over a 40-year career has driven the need for financial help (counseling, advice and guidance). For those offering retirement plans today, providing financial help that is both broadly available and personalized to support individual circumstances is an important plan design consideration.

 

 

Source: Goldman Sachs Asset Management's Retirement Survey & Insights Report 2022, published October 2022.

 

 

 

 

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Disclosures

The views expressed herein are as of October 19, 2022 and subject to change in the future. Individual portfolio management teams for Goldman Sachs Asset Management may have views and opinions and/or make investment decisions that, in certain instances, may not always be consistent with the views and opinions expressed herein.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.

THESE MATERIALS ARE PROVIDED SOLELY ON THE BASIS THAT THEY WILL NOT CONSTITUTE INVESTMENT ADVICE AND WILL NOT FORM A PRIMARY BASIS FOR ANY PERSON’S OR PLAN’S INVESTMENT DECISIONS, AND GOLDMAN SACHS IS NOT A FIDUCIARY WITH RESPECT TO ANY PERSON OR PLAN BY REASON OF PROVIDING THE MATERIAL OR CONTENT HEREIN. PLAN FIDUCIARIES SHOULD CONSIDER THEIR OWN CIRCUMSTANCES IN ASSESSING ANY POTENTIAL INVESTMENT COURSE OF ACTION.

Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO. 

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Goldman Sachs does not provide legal, tax or accounting advice, unless explicitly agreed between you and Goldman Sachs (generally through certain services offered only to clients of Private Wealth Management). Any statement contained in this document concerning U.S. tax matters is not intended or written to be used and cannot be used for the purpose of avoiding penalties imposed on the relevant taxpayer. Notwithstanding anything in this document to the contrary, and except as required to enable compliance with applicable securities law, you may disclose to any person the US federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure, without Goldman Sachs imposing any limitation of any kind. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively and investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. 

This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this document and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only. 

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Index Benchmarks

Indices are unmanaged. The figures for the index reflect the reinvestment of all income or dividends, as applicable, but do not reflect the deduction of any fees or expenses which would reduce returns. Investors cannot invest directly in indices. The indices referenced herein have been selected because they are well known, easily recognized by investors, and reflect those indices that the Investment Manager believes, in part based on industry practice, provide a suitable benchmark against which to evaluate the investment or broader market described herein.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material has been prepared by Goldman Sachs Asset Management and is not financial research nor a product of Goldman Sachs Global Investment Research (GIR). It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Goldman Sachs Asset Management has no obligation to provide any updates or changes. 

Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. It should not be assumed that investment decisions made in the future will be profitable or will equal the performance of the securities discussed in this document.

Date of First Use: October 19, 2022.  294923-OTU-1686047

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