Conference Presentation, Panel
Planning for Your Ideal Retirement: Lessons for Retirement Success | Global Conference 2025
Milken InstituteCheryl Evans, Christine Benz, Thomas Lee, Eric Stevenson, Rebecca Tadikonda, Tom Lee
- The global population over age 60 is projected to reach one in six by 2030, with the number of people living to 100 expected to quadruple in the next decade, creating a convergence of increasing longevity and an aging population that will impact retirement systems.
- Social Security is predicted to become the exclusive reliance for many unsaved individuals, with the average 2025 benefit estimated at approximately $1,975 per month, while Elon Musk has projected the fund may be depleted in less than a decade.
- Future retirement security is expected to rely on shifting from the traditional 4% withdrawal rule, which was based on life expectancy to 75, to guaranteed income solutions with rates targeting 6% of peak account value and a floor not lower than 4.5%.
- By 2026, the regulatory and technological landscape for retirement advice is anticipated to undergo radical changes, including the evolution of target date funds into target income funds designed to sustain retirement through age 100 rather than just to 65.
- Only about 10% of people starting work today are expected to receive a pension, prompting private sector development of substitutes that relieve plan sponsors of balance sheet risk and encouraging employers to offer guaranteed income options covering 30% to 35% of pre-retirement income.
- Average savings figures include $100,000 for the typical American 401k plan and $250,000 for the average defined contribution participant, neither of which is expected to sustain a lifetime without additional strategies or income conversion mechanisms.
- Retirement decisions are expected to be complicated by an average individual holding 12 jobs with fragmented savings, leading to continued leakage when moving between employers, though auto-enrollment, auto-escalation, and future smart defaults are projected to mitigate accumulation issues.
- Specific demographic risks include women facing longevity advantages of a few years over men, increased long-term care risks, and savings shortfalls due to the income gap caused by caregiving interruptions.
- Investment strategies are expected to diverge by age, with investors under 50 encouraged to globalize equity portfolios, particularly in non-U.S. stocks, while those over 50 may benefit from de-risking portfolios into safer assets with higher yields.
- Guaranteed income solutions are expected to resolve the friction of converting savings to lifetime paychecks and insulate individuals from sequence of return risk and 90-day market volatility, with target income funds expected to carry fees of 9 basis points pre-payout and 20 basis points during payout.
- Employers face potential fiduciary risks if they fail to provide efficient guaranteed income solutions to mass populations, while financial advisors remain a critical resource as AI is not certain to replicate the complexity of financial advice effectively in the near term.
- Federal and private sector solutions are anticipated to address a broken retirement system over a 30-year period, with the federal government working on fixes and well-managed public pension plans providing lifetime income without burdening taxpayers.
- Time is described as a potential "magic bullet" for consistent young savers but a liability for those over 50 with insufficient savings, while most people are expected to prefer higher spending in the first decades of retirement for activities like travel and childcare.
- The industry is expected to introduce auto-income options proactively rather than waiting for demand, as participants often fear seeking advice due to the prospect of being told they are unprepared, and research indicates most fear outliving money more than death.