2024 DC Retirement at a Glance

1. OUT OF EQUITIES – Large US pension funds are shifting out of equities and into private equity and real estate. In March, CalPERS voted to reduce the equity allocation of its $494 billion fund from 42% down to 37%, while the $260 billion NY Common Retirement Fund decided to reduce its equity allocation from 47% down to 39%. (Source: WSJ)

2. NEW COLA – Senator Bob Casey introduced the Boosting Benefits and COLAs for Seniors Act on 3/21. The bill would direct the SSA to base the annual cost of living adjustment on changes in the “CPI for Americans aged 62 or Older,” which more heavily weights health care, instead of the “Consumer Price Index for Urban Wage Earners.” (Source: US Senate)

3. WORRIED ABOUT LIVING – 63% of US adults are more worried about outliving their retirement savings than they are about death. Steps cited that they could take to alleviate these concerns were increased retirement savings (41%), less spending (38%) and putting retirement savings into products that provide lifetime income streams (35%). (Source: Allianz Life)

4. ON THE SAME PAGE? – 93% of American investors in committed relationships have shared goals for retirement, but 24% can’t agree on how much they will need to save for retirement. Additionally, while 26% of couples plan to retire at the same time, only 11% of already-retired couples retired together. (Source: Ameriprise)

5. OFFLOADING OBLIGATIONS – Companies looking to get out of managing the pension plans of their employees have found a welcome buyer — private equity–backed insurance companies. In 2023, a record 773 “Pension Risk Transfers” were completed, shifting $45 billion from corporate balance sheets to insurance companies. (Source: Semafor)

6. 401(WHAT?) – While 39% of American adults consider themselves more financially literate than the average person, 43% don’t know what a 401(k) is, over one-third (35%) do not understand the meaning of the term “interest” in the context of finance and only 30% think they could win a game of personal finance trivia. (Source: Beyond Finance)

7. USE YOUR NOGGIN – Researchers in Norway found that workers in routine jobs or careers during their 30s, 40s, 50s and 60s that offered little in the way of mental stimulation were linked to a 37% greater risk of dementia after they turned 70 than workers in jobs with more cognitive and interpersonal demands. (Source: Columbia University)

8. PEAK BOOMERS – Peak Boomers, the last and largest cohort of Americans who will turn 65 this year have a median of $224,714 saved for retirement. Among different demographics, there are wide disparities. The median savings among those with a graduate degree is nearly 100 times more than those without a high school degree ($661K versus $7K). (Source: CBS News) 

9. WORK - SO PRE-COVID – The percentage of Americans expecting to work full-time after the age of 62 averaged 54.6% from 2014 through 2020 and was always above 50%, but in the four years since it has averaged 49.4%. In March 2024, the reading percentage dropped to a record low of 45.8%. (Source New York Fed)

QUESTION: Mutual fund assets in IRAs have seen a gradual decline from 46.7% of total assets in 2015 to an estimated 42.9% in 2023, but their share of assets held in 401(k) accounts has held steady around what percentage? The answer can be found by calling an MFS representative.