PGIM also finds individuals approaching retirement had lowest
average retirement confidence scores in Q4 2023
PGIM, 1 the $1.2 trillion global investment management business
of Prudential Financial, Inc. (NYSE: PRU), finds that retirement
and financial confidence have lingered at “below average” levels
since the second quarter of 2022, according to the firm’s new PGIM
RetireWell™ Confidence Index. In addition, the gap between
financial confidence and retirement confidence has widened
dramatically since the start of 2022, which could indicate that
while investors may feel relatively secure in their investments
today, they worry greatly about the future.
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PGIM RetireWell Confidence Index: Using
the Prudential financial wellness assessment, the current question
used to estimate financial confidence asks respondents, “Overall,
how are you feeling about your finances?” while the retirement
confidence question asks, “Do you think you’ll have enough savings
for the retirement you want?” The PGIM RetireWell Confidence Index
is the average of the financial confidence score and the retirement
confidence score. (Graphic: Business Wire)
The 2022 dive in retirement confidence coincides with the start
of one of the most turbulent years for investors, with the S&P
500 index losing approximately 19.4%—one of the worst years for
equities since 2008— in addition to pressures from high inflation
and interest rate hikes. Not only was 2022 a tough year for stocks,
but bonds also had one of their worst years on record, leaving few
safe places for investors to park their money.
“2022 was a relatively traumatic year for investors, where both
stocks and bonds experienced double-digit losses. This is
incredibly rare, historically,” explains David Blanchett, PGIM DC
Solutions portfolio manager and head of retirement research. “If
the economy keeps doing relatively well, I wouldn’t be surprised if
financial confidence meets or exceeds 2021 levels at some point in
2024, but it will clearly take some time before retirement
confidence returns to where it was.”
PGIM’s quarterly report provides a breakdown of retirement and
financial confidence scores across age and household income levels,
ranging from 0 (low confidence) to 100 (high confidence).
Alarmingly, individuals between 45 and 59 years of age, those
approaching retirement, had the lowest average retirement
confidence score (37) among age groups. This emphasizes the
importance of personalization when it comes to financial advice and
retirement solutions, as age alone often doesn’t tell the full
story.
Michael Miller, head of PGIM DC Solutions, added, “We see the
PGIM RetireWell Confidence Index as a value-add for employers who
want a better understanding of how American workers are thinking
and feeling about retirement and their finances in general. Our
goal is to offer this wellness assessment more broadly, so that we
can provide companies with plan-level insights to improve financial
wellness over time.”
The PGIM RetireWell Confidence Index is part of PGIM RetireWell™
Solutions, a suite of tools, products and solutions developed to
help defined contribution plan participants achieve better
retirement outcomes through holistic advice and guidance.
About the PGIM RetireWell™ Confidence Index
The PGIM RetireWell™ Confidence Index is a comprehensive
wellness sentiment index based on more than 300,000 completed
responses to a financial wellness assessment survey offered by
Prudential Financial, Inc. through a group insurance benefits
platform or through a defined contribution plan since 2018. The
index, updated on a quarterly basis, considers both financial
confidence and retirement confidence to develop the overall index
score. Please see the methodology overview for more detail.
ABOUT PGIM DC SOLUTIONS
As the retirement solutions provider of PGIM, PGIM DC Solutions
seeks to deliver innovative defined contribution solutions founded
on market leading research and capabilities. Our highly experienced
team partners with clients on customized solutions to solve for
retirement income. As of Sept. 30, 2023, PGIM has $164 billion in
DC assets under management.
ABOUT PGIM
PGIM, the global asset management business of Prudential
Financial, Inc. (NYSE: PRU), is a leading global investment manager
with more than $1.2 trillion in assets under management as of Sept.
30, 2023. With offices in 18 countries, PGIM’s businesses offer a
range of investment solutions for retail and institutional
investors around the world across a broad range of asset classes,
including public fixed income, private fixed income, fundamental
equity, quantitative equity, real estate and alternatives. For more
information about PGIM, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not
affiliated in any manner with Prudential plc, incorporated in the
United Kingdom, or with Prudential Assurance Company, a subsidiary
of M&G plc, incorporated in the United Kingdom. For more
information, please visit news.prudential.com.
1 The term PGIM as used in this announcement includes PGIM DC
Solutions LLC.
The PGIM RetireWell™ Confidence Index is not an
investable index. While the Index was launched as of Q2 2023, PGIM
DC Solutions used historical data to calculate prior Confidence
Index levels.
The index is based on over 300,000 completed financial wellness
assessments offered by Prudential Financial, Inc. for American
workers who typically have access to a defined contribution plan.
The Index controls for the demographic factors related to
confidence, such as age, income, gender, and marital status, and
provides context as to how sentiment has evolved over time. There
are six potential confidence levels, which are (from best to
worst): Very High, High, Above Average, Below Average, Low, and
Very Low.
All investments involve risk, including the possible loss of
capital. Asset allocation, diversification, dollar-cost averaging
and/or rebalancing do not ensure a profit or protect against
loss.
The information presented is for informational purposes only and
is not intended as investment advice and is not a recommendation
about managing or investing retirement savings. These materials do
not take into account individual investment objectives or financial
situations. These materials are for informational, illustrative and
educational purposes only.
PGIM DC Solutions LLC ("PGIM DC Solutions") is an SEC-registered
investment adviser, a Delaware limited liability company, and an
indirect wholly-owned subsidiary of PGIM, Inc. ("PGIM"), the
principal asset management business of Prudential Financial, Inc.
("PFI") of the United States of America. PGIM DC Solutions is the
retirement solutions provider of PGIM and aims to provide
innovative defined contribution solutions founded on market leading
research and investment capabilities. Registration with the SEC
does not imply a certain level of skill or training.
PGIM DC Solutions aims to help participants achieve their
retirement goals through their suite of “PGIM RetireWell™”
solutions. These solutions may include a range of investment
options including target date portfolios, retirement spending
strategies, and managed accounts powered by our proprietary advice
engine. There is no guarantee that investment or retirement goals
will be achieved. Use of the term “RetireWell” and any related
phrase is not intended to indicate that such goals will be
achieved.
© 2024 Prudential Financial, Inc. and its related entities.
Prudential, the Rock symbol, and the PGIM logo are service marks of
Prudential Financial, Inc. and its related entities, registered in
many jurisdictions worldwide.
CONNECT WITH US: Visit pgim.com Join the conversation
@PGIM
PGIM DCS – 3367175
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Kylie Scott +1 973 902 2503 kylie.scott@pgim.com
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