Asset Allocation

Are Our Retirement Funds Right for You?

Discover how T. Rowe Price Retirement Funds are built to help a broad range of investors achieve their financial goals in retirement.

Key Points

  • Our funds seek to build an asset base sufficient to support income throughout a potentially lengthy retirement.
  • A meaningful equity allocation could help build a nest egg large enough to last throughout retirement—and may help our funds outperform other target date strategies with less exposure to stocks.
  • We were a pioneer of target date investing 15 years ago, and we’ve been innovating ever since.
  • We remain committed to our core investment approach, while a consistent focus on research and innovation aims to improve investment outcomes.

Some investors are meticulous planners. Some are excessive worriers. Some are cautious skeptics. Recognizing that everyone has individual wants, needs, and circumstances, the T. Rowe Price Retirement Funds are built with a range of investors in mind. At the same time, they incorporate a consistent investment approach and a focus on purposeful innovation. It’s all designed to help investors pursue a singular goal: better investment outcomes in retirement.

Here’s how our Retirement Funds may fit your needs:

Just like you, we’re focused on your financial success in retirement.

If you’re thinking about the future, you want to make sure you have enough income to live comfortably throughout retirement—especially now that people are living longer than ever.

Building a nest egg large enough to last throughout what could be a lengthy retirement can be a challenge. However, our research suggests that an investment strategy that leverages the growth potential of stocks could help you reach that goal.

That’s why our Retirement Funds’ mix of stocks, bonds, and cash adjusts over time and is designed with a meaningful equity allocation—harnessing the growth potential of stocks could help to support an income stream over a retirement that may last for 30 years. It’s a strategy that has proven valuable to investors in the past, even through the recent financial crisis.

As the chart below shows, a hypothetical $100,000 investment in an index portfolio representing the glide path of our Retirement 2010 Fund held from the fund’s inception resulted in $31,290 more than a comparable investment in the S&P 2010 Target Date Index.

Our approach led to better outcomes before and after the 2008-2009 global financial crisis.

 

T. Rowe Price Retirement 2010 Combined Index vs. S&P Target Date 2010 Index
The chart below represents index performance for a fixed equity allocation.
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Past performance cannot guarantee future results.

The results above represent index performance.  Index performance is for illustrative purposes only and is not indicative of any mutual fund. Investors cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or taxes.  Results for other Funds may differ. For the performance of all of our Retirement Funds, click on the link at the top of the page.

Chart shows growth of 100,000 USD invested in the T. Rowe Price Retirement 2010 Combined Index and the S&P Target Date 2010 Index on September 30, 2002.

Figures include changes in principal value, and reinvested dividends.

The T. Rowe Price Retirement 2010 Combined Index is a blended benchmark composed of 43.5% stocks (30.5% Russell 3000 Index and 13.0% MSCI All Country World Index ex USA), and 56.5% bonds (41.0% Bloomberg Barclays U.S. Aggregate Bond Index and 15.5% Bloomberg Barclays U.S. 1-5 Year Treasury Inflation Protected Securities (TIPS) Index). The combined benchmarks mirror the strategic allocations for each fund as they move along their glide paths but do not include tactical adjustments. The combined passive benchmarks allow us to measure the value added or detracted by T. Rowe Price via tactical allocation and active security selection. Combined Index allocations change over time. See the prospectus for details.  

S&P Target Date Index is a benchmark series reflecting the consensus asset allocation and glide path of a subset of Target Date Funds that generally pursue investment policies characterized by declining total equity exposure after retirement and a relatively aggressive total equity exposure near retirement.

We have the flexibility to adjust to market conditions.

When it comes to our Retirement Funds, our investment approach seeks to generate excess return and minimize downside potential in three key ways*, which have been shown to add value over time:

  1. Strategic portfolio design that diversifies across asset classes and includes and age-appropriate equity allocation.
  2. Dynamic tactical adjustments—which consider broader economic cycles and market conditions with the goal of improving investor outcomes.
  3. Active security selection in our underlying portfolios.

*Click here to see how these three ways have added value for investors over the long-term.

As the hypothetical example below demonstrates, even small amounts of added return can have a meaningful impact over time.

Even small increases in returns can have a big impact on outcomes in retirement.
The example below is hypothetical and is not representative of T. Rowe Price funds.
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Past performance cannot guarantee future results.

The results shown above are hypothetical, do not reflect actual investment results, and are not a guarantee of future results.  Hypothetical results were developed with the benefit of hindsight and have inherent limitations.  Hypothetical results do not reflect actual trading or the effect of material economic and market factors on the decision-making process.  Results do not include the impact of fees, expenses, or taxes. Results have been adjusted to reflect the reinvestment of dividend and capital gains. Actual returns may differ significantly from the results shown above.

The demographic assumptions, returns, and ending balances are shown for illustrative purposes only and are not intended to provide any assurance or promise of actual returns and outcomes.

With us, you get a consistent approach and purposeful innovation.

When saving for retirement, you’re not just investing your money, you’re investing in your future. T. Rowe Price has an 80-year track record of investment management, 40 years of experience in Retirement Plan Services, and 15 years managing our Retirement Funds. With that experience comes a spirit of intentional innovation – instead of constantly changing our approach to suit the investment fad of the moment, we remain true to our investment process while innovating with a singular purpose: better retirement outcomes for our investors.

Our Retirement Funds have delivered strong performance.
As of September 30, 2017.
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View performance data for all of our Retirement Funds.

 

Past performance cannot guarantee future results.

Of the Retirement Fund series, 12 of 12, 11 of 12, and 12 of 12 funds were in the top quartile for each of the 3-, 5-, and 10-year periods ended September 30, 2017. The results are based on rolling monthly 3-, 5- and 10-year time periods.

Along with our experience and consistent approach comes a spirit of innovation—

  • We were a pioneer of meaningful equity allocations in retirement portfolios to help ensure investors don’t outlive their assets.
  • We were the first to implement an extended glide path that continues 30 years past retirement and dynamically adjusts over your investment lifecycle.
  • And early on, we recognized the need to provide inflation protection for long-term retirement investing and added the treasury inflation protected securities strategy and real assets equities to our funds' underlying investment mix.

As a leader in the industry, we believe our solutions feature the most current thinking in target date investing. We subject our glide paths to thousands of economic and financial market scenarios. That means they’re constructed to weather a variety of market conditions. Financial markets are never short on surprises. While the future is always uncertain, we believe our Retirement Funds can help you stay on track no matter what the future holds.
 

Call 1-800-225-5132 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.

Important Information

The principal value of the Retirement Funds is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The fundsʼ allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term postretirement withdrawal horizon. The funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility over shorter time horizons.

1Target Date Investing – T. Rowe Price's Glide Path Design Framework.

Note that past performance data throughout this material are not reliable indicators of future performance.