Why This Trend is Becoming More Popular for Retirement

NEW YORK (MainStreet)—Both genders are saving more for retirement, but men are paying more attention, according to a new study.

A recent MassMutual Retirement study found that women are gaining on men in retirement plan account balances as well as in savings rates.

In fact, saving enough for retirement has surpassed keeping up with monthly expenses as the biggest financial worry at 24%, up from 18% in 2011. The second most-cited worry is paying down debt.

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"The evidence that retirement is on the minds of virtually every American worker is encouraging," says Merl Baker, principal with Brightwork Partners, which conducted the survey.

For both women and men, the average expected retirement age is about 66 with the average retirement savings rate at 10.5% among those surveyed. That's up from 9% two years ago.

About 37% of respondents have considered delaying retirement beyond their original target date, and that percentage jumps to almost 50% for people currently age 50 or older.

Target date mutual funds are one solution that can help Americans of both genders catch up.

Target date mutual funds are all-in-one portfolios for retirement that automatically resets the asset mix of stocks, bonds and cash according to a selected time frame that is appropriate for a particular investor with a retirement year in mind. For example, a 50-year-old anticipating retiring at 65, would select a 2030 mutual fund. For more conservative investors, a 2025 target date mutual fund may be more appropriate.

Most target date mutual funds will sufficiently support retiree spending to age 85 given a standard set of savings, withdrawal rates and other factors," according to Morningstar analysis.

"Each series is structured along its guide path, which changes the fund's asset allocation as the investor gets closer to their retirement date," said Morningstar's Josh Charlson. "The funds in the lineup are pegged in five- to ten-year increments to align with an expected retirement date. "

Target-date series assets reached $500 billion in 2013's first quarter with market leaders Vanguard, Fidelity and T. Rowe Price maintaining their hold on the industry.

"All target date mutual funds get more conservative as the investor approaches the target date but fund families have different definitions as to how conservative their investments should be," said Charlson.

The amount invested in equities in a conservative target date mutual fund are generally lower than in mid-range target date mutual funds.

Morningstar's top rated target date mutual fund series include offerings from Vanguard, T. Rowe Price, American Funds and JP Morgan. More conservative target date mutual funds include Wells Fargo, Putnam and Pimco.

The T. Rowe Price Retirement 2030 Fund (TRRCX) had an annual return of 14.8% while the Fidelity Freedom 2030 Fund (TXIFX) returned 11.4%.

Despite the availability of retirement solutions, such as target date mutual funds, 63% of people expect to work at least part-time in retirement and 54% expect they will need to reduce their standard of living.

The proportion of workers under age 50 who are considering delaying retirement is up five points while the proportion of workers age 50 and over who are considering delaying retirement is down five points. But men are more likely to have a professional advisor and are more confident than women in virtually every aspect of retirement planning and defined contribution investment decisions.

"I'm pleased to see that participants consider financial professionals an important source of investment information and that, among those who use an advisor, satisfaction is up significantly," said Baker.

Satisfaction with information from professional advisors is up sharply.

About 47% of those surveyed were very satisfied with information from professional advisors in 2013 compared to 25% in 2011.

--Written by Juliette Fairley for MainStreet

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