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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1, 2 OR 754

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

DEFINED CONTRIBUTION

Find better results in DC plans

Investment selection might be the most important decision plan sponsors make. Even a slightly higher annual return can dramatically extend a participant’s retirement savings. 

Small increases, big outcomes

Even a hypothetical 0.5%-1% annual boost in returns can have a strong impact 

Impact of 50 bps and 100 bps increases in return in a hypothetical savings and withdrawal scenario

This graph is a visual representation of the Demographic and Scenario assumptions below. It shows that, over 40 years of investing, the baseline account balance was $886,415. The account balance, with a return of 0.50% more, would be $106,266 higher, and with a return of 1.00% more, would be $227,763 higher. With annual withdrawals of $60,260, the returns of 0.50% and 1.00% more would provide 5 years and 16 years of additional retirement spending, respectively.

Demographic assumptions

Starting balance

$0


Starting age

25


Starting salary

$40,000


Annual salary growth rate

3%


Annual contribution rate

10%


Retirement age

65


Ending salary at 65

$130,482


Scenario assumptions

(Assumes equivalent annual retirement income)

0

Baseline

+50 bps

+100 bps

Returns before 65

5.5%

6.0%

6.5%


Returns after 65

3.5%

4.0%

4.5%


Account balance at 65

$886,415

$992,680

$1,114,177


Annual retirement income*

$60,260

$60,260

$60,260


Years of retirement spending

20 years

25 years

36 years

Alternative annual withdrawal scenario

(Assumes entire account balance is spent over 20 years)

0

Baseline

+50 bps

+100 bps

Years of retirement spending

20 years

20 years

20 years


Annual retirement income

$60,260*

$70,234

$81,965

*Withdrawal that produces 20 years of income in the baseline scenario, which equates to an income replacement of 46% of the ending salary.

Source: Capital Group. The demographic assumptions, returns and ending balances are hypothetical and provided for illustrative purposes only, and are not intended to provide any assurance or promise of actual returns and outcomes. Returns will be affected by the management of the investments and any adjustments to the assumed contribution rates, salary or other participant demographic information. Actual results may be higher or lower than those shown. Past results are not predictive of results in future periods. Based on an exhibit from Russell Investments. The additional years of retirement spending are intended to represent a conservative measure. Totals may not reconcile due to rounding.

That’s the true value of finding the right fund and the right manager. It can give participants the retirement lifestyle they deserve.

Why settle for the baseline when you can elevate a participant’s retirement? 

A 1% annual increase in returns could mean an additional 16 years of retirement spending for participants. That’s 192 months of retirement income participants may not have even anticipated. 

Resources

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.

Use of this website is intended for U.S. residents only. Use of this website and materials is also subject to approval by your home office.

American Funds Distributors, Inc., member FINRA.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.