Retirement Readiness

Shaping The Retirement Landscape

Closing a widening retirement savings gap, improving financial wellness, and adjusting to lower return expectations

T. Rowe Price’s Inaugural U.S. Retirement Market Outlook examines the 2022 retirement landscape. Click here to download the full report. Reprinted with permission.

BALTIMORE, Nov. 17, 2021 /PRNewswire/ — T. Rowe Price held its inaugural U.S. Retirement Market Outlook press briefing yesterday, offering research-based insights on major themes expected to shape the retirement landscape in 2022. Amid recent significant global events like the pandemic and its impact on the market, a select group of the firm’s experts shared their perspectives on key topics, including the widening retirement savings gap, trends in prioritizing financial wellness, and the current investment market environment.

Hosted virtually, the panel discussion included commentary from Joshua Dietch, group manager of Retirement Thought Leadership; Michael Doshier, senior retirement strategist; Lorie Latham, senior defined contribution strategist; Wyatt Lee, head of Target Date Strategies; and Rachel Weker, senior retirement manager. The event was hosted by Michael Davis, who is head of institutional defined contribution specialists and former deputy assistant secretary at the U.S. Department of Labor.

Specifically, the panel discussed:

Retirement plan access and adequacy: The ways in which legislators, regulators and employers are responding to the widening retirement savings gap – now an estimated $4 trillion – that continues to play a significant role in shaping the retirement landscape.

Financial wellness: How financial wellness programs serve as a critical solution to redefining the path to and through retirement and helping workers and retirees meet their goals – especially given heightened recognition that competing savings needs and debt are significant barriers to successful retirement outcomes.

The investment landscape: Ways retirees and people saving for retirement could consider adjusting and planning for their saving and spending, notably in an environment where capital markets appear poised to enter a new era of lower expected returns.

“With more than two-thirds of our managed money in retirement, T. Rowe Price has been helping investors plan and save for the retirement they envision for more than 80 years,” said Robert Higginbotham, head of global distribution. “Our research shows that many savers are grappling with connecting the dots between the actions they take today and how those actions will affect future retirement outcomes. As retirement savers, employers, and advisors navigate a notably changing environment, our first-ever U.S. Retirement Market Outlook employs the firm’s recognized retirement expertise, research, and perspectives in investing excellence to deliver insights on emerging trends and their impacts on the retirement landscape.”

Access and Adequacy: Closing a Widening Retirement Savings Gap

The retirement savings gap—the difference between what retirement savers need and what they have accumulated—is now approaching an estimated $4 trillion. And it is widening in significant ways, exacerbated by the recent economic shocks, while the call to action to close the gap is more focused than ever. The retirement industry needs to be attentive to identifying ways to close the gap. At the same time, the response by institutions, legislators, regulators, and employers is playing a significant role in shaping the retirement landscape this year and well into and beyond 2022.

The traditional notion of a three-legged stool composed of Social Security, private pensions, and personal savings has been transformed, for most, with the replacement of private pensions by defined contribution (DC) plans. While Social Security still provides a meaningful benefit, DC plans, and the personal accountability inherent in them, are now firmly the vehicle for individuals to accumulate wealth for retirement. However, stools can only stand if they have a minimum of three legs, and only 64% of private industry workers have access to a DC plan, such as a 401(k). Yet even those with access may come up short in meeting their retirement savings needs.

The sky certainly isn’t falling. Individuals retire every day, and research shows that 80% of retirees are enjoying their retirement. The research also finds that the anxieties pre-retirees had while saving for retirement eased once they retired. The financial realities retirees face often prove to be much less daunting than they may have believed while working. Still, we see a key theme of 2022 as addressing retirement plan access and adequacy.

Financial Wellness: Redefining the Path to Retirement Success

Research shows that many savers are grappling with connecting the dots between the actions they take today and how those actions will affect future retirement outcomes...

Financial wellness is now recognized as a critical solution to helping workers and retirees meet their goals. This has accelerated the shift to measuring retirement success holistically and recognizing that competing savings needs and debt are significant barriers to successful retirement outcomes. There are several reasons why we see financial wellness as one of the critical trends for the retirement industry right now. One is a recognition that the retirement savings gap that plan participants face is unlikely to be erased without simultaneously improving the financial wellness, or the financial resiliency and well-being, of those enrolled in defined contribution plans such as 401(k)s. There’s also a growing recognition of workers’ financial fragility (defined as the inability to come up with $2,000 within 30 days to meet an unexpected expense).

At the same time, the pandemic has woken up the industry to the importance of financial wellness, demonstrating the direct connection between saving and spending. Those who needed financial help may have tapped in to retirement savings that they may struggle to replace or incurred debts that will impair their ability to save. Another impact is that employers are struggling to recruit and retain workers who are now emboldened to look for new employment, either due to economic need or opportunity.

The competition for labor is intense and will only become more so, at least in the short to intermediate term. This shines a spotlight on the need for more competitive benefits for employers to offer, including those tied to a more comprehensive set of financial wellness solutions. As a result, there has been an acceleration in the adoption of financial wellness programs to help employees or to provide benefits they have stated they want or need. Indeed, 59% of industry professionals expect the demand for financial wellness programs to grow, according to the research.

The Investment Landscape: Implications for Retirement Savings and Spending

Global markets have staged a remarkable recovery from the historic pandemic-induced sell-off in 2020. While the virus remains a key risk to public health and economic activity, significant progress in the distribution of vaccines and the loosening of government restrictions has contributed to improved economic sentiment. Moreover, central banks and governments have taken aggressive monetary and fiscal stimulus measures, which have offset economic damage and provided a potent tailwind for returns.

However, it is believed that midterm returns will be lower than those seen in previous periods—in some cases considerably lower. This has significant ramifications for retirement plans and whom they benefit. This shift in the investing landscape is why we think the longer-term outlook will be a significant theme in 2022 and beyond. A large measure of financial success in retirement stems from the effects of compounded investment returns and its sources both prior to and after retirement. The unpredictable nature of markets is one of many factors that shape the retirement landscape. Just as important are investor behaviors, longevity, and both the access to and adequacy of retirement savings plans. Still it’s important to understand what is driving our lower capital markets assumptions.


Investors have choices, and possibly the simplest response is to accept that the investment environment has changed and that returns on multi-asset portfolios are likely to be lower than they have been in the past. For investors, this may mean recalibrating their behavior, as previously discussed.

Still, getting investments right is critical. Moving into a period of lower expectations for returns reduces
the margin for error. In our opinion, retirement investors can increase their chances of success by:

  • Understanding that successful retirement outcomes necessitate a long- term investment perspective.
  • Diversifying across both equities and fixed income to pursue excess returns.
  • Focusing on investment options that have the potential to perform well in both high- and low-return environments.




About T. Rowe Price
Founded in 1937, T. Rowe Price (NASDAQ-GS: TROW) is an independent global asset management company with $1.67 trillion in assets under management as of October 31, 2021. The firm is focused on delivering investment excellence and retirement services for institutional, intermediary, and individual investors. Our strategic investing approach, driven by independent thinking and guided by rigorous research, helps clients feel confident in pursuing financial goals. For more information, visit, Twitter, YouTube, LinkedIn, Instagram, or Facebook.