Positioning target date strategies for sustainable retirement income

Michelle J. Black Jeb Bent Kelly Campbell

Almost 20 years after the passage of the Pension Protection Act (2006) that spurred their growth, target date funds (TDFs) have become one of the leading retirement investment solutions in the United States. At the same time, amid a decline in defined benefit pension plans and some uncertainty regarding future Social Security benefits, retirees in the U.S. are living longer with low savings rates and potentially fewer sources of guaranteed income in retirement.

 

As a result, many retirees may be relying more on target date solutions to support their retirement income needs. This raises some vital questions about how target date solutions can best be positioned to generate sustainable retirement income, especially considering the diversity of participant needs, goals and risk tolerance levels.

 

Our white paper outlines Capital Group’s approach to designing target date strategies that can help meet sustainable retirement income needs throughout retirement. 

KEY TAKEAWAYS

  • Retirees are increasingly relying on employer-sponsored target date solutions for retirement income, making thoughtful design crucial. Design that accounts for retirement-specific risks as well as retiree behavior, changing spending patterns and non-discretionary expenses throughout retirement is critical in addressing the needs of this cohort.
  • Persona research and modeling informs our “glide path within a glide path” approach, shifting allocations as participants age, emphasizing different objectives throughout the glide path, to help mitigate retirement-specific risks while helping to support sustainable withdrawals.
  • Active management and multi-asset flexibility are key differentiators. Underlying strategy managers have the flexibility to leverage equity and fixed income to maximize opportunities across market environments. 
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Michelle Black is a solutions portfolio manager with 31 years of industry experience, as of 12/31/25. She is the principal investment officer of the American Funds Target Date Retirement Series®, the chair of the Target Date Solutions Committee and also serves on the Portfolio Solutions Committee and the Custom Solutions Committee. She holds a bachelor’s degree in business administration from the University of Southern California. She also holds the Certified Investment Management Analyst® and Certified Private Wealth Advisor® designations and is a member of the Investments & Wealth Institute.  

Jeb Bent is a multi-asset investment director with 17 years of industry experience as of 12/31/25. He holds a bachelor’s degree in urban studies from Fordham University. He also holds the Certified Financial PlannerTM certification, the Chartered Financial Analyst® designation and is a member of the CFA Society of New York. 

Kelly Campbell is a multi-asset solutions business lead with 25 years of industry experience as of 12/31/25. She holds a bachelor’s degree in economics from Harvard, graduating cum laude. She also holds the Chartered Financial Analyst® designation. 

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Although target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met.
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