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Retirement Investing

2025 DC Retirement at a Glance

Stay up to date on capital markets and the retirement industry with our quick insights and information.

 

 

 



56% of Americans trust humans more than AI to create a retirement plan for them, compared to 13% who would trust AI more.
Nearly half (47%) of Americans, however, would prefer to work with an advisor who uses AI to help keep their clients financially secure. That sentiment is highest among Gen Z and Millennials (54%) compared to just 36% of Baby Boomers.* (Source: Northwestern Mutual)  

 


1. RETIRE FREE OR DIE – Incorporating 15 different factors, including affordability, weather, safety, health care and local taxes, a study from Bankrate found that New Hampshire is the best state for retirees, and four of the top 10 best states (ME, NH, RI and VT) are in the Northeast. Louisiana ranked the worst, and eight of the 10 worst states were in the Sun Belt. (Source: Bankrate)

2. HAPPY 90TH! – August 14 marked the 90th anniversary of President Roosevelt signing the Social Security Act into law. Currently, 182.8 million workers contribute to the program, compared to 67.1 million beneficiaries. This 2.7:1 ratio is tied for the lowest on record and is down from 5.1:1 in 1960. (Source: AARP)

3. WILL IT BE AROUND FOR 90 MORE? – According to a study from TransAmerica, 70% of Americans are worried that Social Security will not be there for them in retirement, but 32% still expect it to be their primary source of income. Broken down by sex, 36% of women near retirement and just 27% of men say they will rely on Social Security as their primary source of retirement income. (Source: Financial Advisor)

4. SPENDING DECLINES WITH AGE – Retirement spending tends to decline with age. Retirees between the ages of 65 and 74 spend an average of $65,149 per year, while retirees 75 and older spend an average of $53,031 — 19% less. Areas where spending falls the most with age are personal insurance (-56%), transportation (-41%) and entertainment (-38%). (Source: Corebridge)

5. AUTO-IRA GROWTH ON AUTOPILOT – Assets in state-automated retirement savings programs (auto-IRAs) crossed $2 billion for the first time in July. Auto IRAs are designed for workers who do not have access to employer-sponsored retirement plans and are available in 11 states. After their inception in 2017, assets in auto-IRAs first crossed $1 billion in December 2023. (Source: Pew Research)

6. 401(K) ALTERNATIVES – On 8/12, five days after the President issued an executive order, the Department of Labor rescinded its 2021 stance that discouraged fiduciaries from including alternative assets in 401(k) plans. This move clears way for retirement savers to access alternative assets, a market that has grown from under $5 trillion of assets under management in 2010 to $18.2 trillion in 2024. (Source: CAIS)

7. ARE THEY GOOD INVESTMENTS? – Alternative investments will be allowed as options in 401(k) plans, but that doesn’t necessarily make them good investments. A recent Morningstar study found that of the 2,009 mutual funds launched from 2010 to 2019 categorized as “Alternative” or Nontraditional Equity,” only 459 (23%) are still active today. (Source: Morningstar)

8. DEMANDING GUARANTEES – 93% of workers say it’s important for their company retirement plans to offer options to convert savings into guaranteed lifetime income plans (i.e. fixed annuities) compared to 2021 when that percentage was just 57%. Despite this high percentage, however, only 21% of retirement plan participants have given a lot of thought to converting their savings to income in retirement. (Source: Nuveen)

9. MOVING TARGET ALLOCATIONS – At the end of 2024, the average equity allocation in target date funds of workers just starting their careers was 92%, compared to 85% in 2014. In addition, for investors five years from retirement, the average equity allocation in target date funds has increased to 55%, up from 40% in 2014. (Source: WSJ)

QUESTION: The average American is expected to incur total costs of $877,000 in retirement, compared to total projected income of $762,000 from benefits, savings and investments; this creates a total retirement shortfall of $115,000. What states have the highest average retirement shortfall, and in how many states do the average retirees have a retirement surplus?


 

*According Statista, Generation Z was born between 1997 and 2012, Millennials were born between 1981 and 1996 and Baby Boomers we’re born between 1946 and 1964.

Keep in mind that all investments, including mutual funds, carry a certain amount of risk including the possible loss of the principal amount invested.

These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any other MFS investment product. No forecasts can be guaranteed. Past performance is no guarantee of future results.

MFS® does not provide legal, tax or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances. This has been provided for informational purposes only, and reflects the current opinion of the author, which is subject to change without notice, as are statements of financial market trends, which are based on current market conditions. Past performance is no guarantee of future results. Integrated Retirement is not affiliated with MFS Investment Management® or any of its subsidiaries.

Distributed by: U.S. - MFS Fund Distributors, Inc., Member SIPC, Boston, MA.

Please note that in Canada this document is intended for distribution to institutional clients only. Note to readers in Canada: Issued in Canada by MFS Investment Management Canada Limited.

Note to readers in Canada: Issued in Canada by MFS Investment Management Canada Limited.

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