PLANSPONSOR - October-November 2022 - 26
INVESTMENTS | FIXED INCOME
Managing Volatility
T
he year has not been forgiving to
investment portfolios. As of midOctober,
traditional 60/40 portfolios
were down about 20% on the year. High
inflation, coming alongside investment
drawdowns, has further eroded capital.
For individuals at or near retirement,
the problem is especially acute. High inflation
and high volatility can make it difficult
to plan for income needs against expected
portfolio return. That is compounding an
already difficult situation.
According to Goldman Sachs Asset
Management's most recent survey about
retirement, fielded this summer, 51% of
retirees have less than half the income they
received while working. Also, more than
one-third (37%) of workers said they were
planning to delay retirement anywhere
from one to five years due to the impact of
COVID-19. Those delays may lengthen if
investments fail to rebound next year and
the economy enters a recession, as many
economic analysts anticipate.
In retirement parlance, the technical
term for this confluence of events
is " sequence of returns risk. " It is what
happens when a cohort of employees has
to retire into a downturn, and it can have a
lasting impact on how people manage their
retirement and approach income-generating
strategies during that life stage.
According to analysis from Charles
Schwab, individuals who experience a
15% portfolio decline in the first one to
three years of retirement tend to run out
of money faster than a person with a portfolio
decline later. This is especially true if
26 PLANSPONSOR.COM October - November 2022 Art by Andrea D'Aquino
Retirement income could be a means of escape in turbulent times
it takes a long time for markets to recover.
For plan sponsors and participants,
it is likely that, over the next decade, there
will need to be an increased focus on
retirement income solutions to help people
manage through the changed economic
and market conditions. In the GSAM
survey, 34% of respondents said they
wanted guidance from their plan's sponsor
or adviser about income-generating strategies.
A further 32% said they wanted advice
on how to mitigate longevity risk so as to
not outlive what they already have saved.
Respondents also wanted advice on how to
deal with volatility in their portfolios.
Rethinking Fixed income
" What people need to understand is,
this isn't their parents' retirement, " says
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PLANSPONSOR - October-November 2022
Table of Contents for the Digital Edition of PLANSPONSOR - October-November 2022
INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
Deep Dive
Managing Volatility
New Solutions
Participant ESG Demands
Good Practices
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover1
PLANSPONSOR - October-November 2022 - Cover2
PLANSPONSOR - October-November 2022 - 1
PLANSPONSOR - October-November 2022 - INSIGHTS
PLANSPONSOR - October-November 2022 - 3
PLANSPONSOR - October-November 2022 - RULES & REGULATIONS
PLANSPONSOR - October-November 2022 - 5
PLANSPONSOR - October-November 2022 - 6
PLANSPONSOR - October-November 2022 - 7
PLANSPONSOR - October-November 2022 - 8
PLANSPONSOR - October-November 2022 - 9
PLANSPONSOR - October-November 2022 - UPFRONT
PLANSPONSOR - October-November 2022 - 11
PLANSPONSOR - October-November 2022 - 12
PLANSPONSOR - October-November 2022 - 13
PLANSPONSOR - October-November 2022 - 14
PLANSPONSOR - October-November 2022 - 15
PLANSPONSOR - October-November 2022 - Deep Dive
PLANSPONSOR - October-November 2022 - 17
PLANSPONSOR - October-November 2022 - 18
PLANSPONSOR - October-November 2022 - 19
PLANSPONSOR - October-November 2022 - 20
PLANSPONSOR - October-November 2022 - 21
PLANSPONSOR - October-November 2022 - 22
PLANSPONSOR - October-November 2022 - 23
PLANSPONSOR - October-November 2022 - 24
PLANSPONSOR - October-November 2022 - 25
PLANSPONSOR - October-November 2022 - Managing Volatility
PLANSPONSOR - October-November 2022 - 27
PLANSPONSOR - October-November 2022 - 28
PLANSPONSOR - October-November 2022 - 29
PLANSPONSOR - October-November 2022 - New Solutions
PLANSPONSOR - October-November 2022 - 31
PLANSPONSOR - October-November 2022 - 32
PLANSPONSOR - October-November 2022 - 33
PLANSPONSOR - October-November 2022 - Participant ESG Demands
PLANSPONSOR - October-November 2022 - 35
PLANSPONSOR - October-November 2022 - Good Practices
PLANSPONSOR - October-November 2022 - 37
PLANSPONSOR - October-November 2022 - FIDUCIARY FORUM
PLANSPONSOR - October-November 2022 - INSIDE ANGLE
PLANSPONSOR - October-November 2022 - PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover3
PLANSPONSOR - October-November 2022 - Cover4
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