An Effective Retirement Plan Does Not End at Retirement | Capital Group

An Effective Retirement Plan Does Not End at Retirement

February 2017

DC Investment Perspectives: An Effective Retirement Plan Does Not End at Retirement

Defined contribution (DC) plans, originally designed as supplemental  savings vehicles, typically focus only on the savings phase — not the needs of retirees. Part of the reason for the historic success of the traditional defined benefit (DB) plan is that it is structured to provide participants retirement income directly from the plan.

To truly evolve into a complete retirement plan for American workers, the DC system needs to robustly serve participants in both the spending and saving phases. Sponsors can take the following steps to strengthen their DC plan to support participants in retirement. 

• Evaluate core menu and target date options to address spending phase needs.

• Work with the recordkeeper to allow for choice in distribution strategies and efficient systematic withdrawals.

• Update employee communications and education materials to include specifics about the spending phase.


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 mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer. 

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.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.