J.P. Morgan Asset Management Releases 2023 Guide to Retirement

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Mar 06, 2023, 12:00 ET

11^th edition of Guide examines impacts of SECURE 2.0 Act, importance of staying invested through volatility, and need to align your portfolio to long-term financial goals.

NEW YORK, March 6, 2023 /PRNewswire/ -- J.P. Morgan Asset Management today released the 11th edition of its annual Guide to Retirement, analyzing the most significant issues impacting retirement to help advisors and their clients, and DC plan participants make informed planning decisions and take positive actions to achieve a comfortable retirement.

"Retirement investors have experienced unprecedented volatility in the market throughout the last year, and face uncertainty for the year ahead. However, we feel optimistic for the future of retirement security as legislators and policy makers are emphasizing the need for broader access to retirement plans and an increase in savings rates." said Michael Conrath, Chief Retirement Strategist, J.P. Morgan Asset Management. "Our 2023 Guide to Retirement has been designed to help advisors navigate the evolving economic environment, take advantage of recent legislative changes, and provide long-term investing strategies to drive stronger retirement outcomes for clients."

Below is an overview of five key retirement themes featured in the 2023 Guide to Retirement:

1. Opportunities presented by SECURE 2.0 Act ("Act")

The Act will encourage small businesses to create retirement plans through increased tax credits. This provision specifically addresses nearly 50% of those private sector employees working for small businesses who have no employer-sponsored plans and those who have employer-sponsored plans are more likely to save towards retirement by two fold.

2. Importance of building an emergency reserve

Spending and income shocks are prevalent for workers and retirees alike. Retirees encounter more shocks in larger amounts than workers likely due to unpredictable healthcare costs. If people don't have an emergency reserve, they often tap their retirement portfolios prematurely and jeopardize their retirement success. We find from Chase consumer data that workers need about 2-3 months of pay in an emergency reserve and 3-6 months of pay for retirees.

3. Strategic adoption of tax-advantaged accounts

Individuals should consider diversifying their sources of retirement income. Maintaining a healthy mix of taxable, tax-free (Roth) and tax-deferred accounts can provide greater flexibility and control when managing income taxes over time.

4. Aligning your portfolio with your goals

Individuals may have different methods for funding their lifestyle in retirement, whether that's growing their portfolio, maintaining or spending some of their principal. For those who are spending principal, consider a dynamic spending strategy or protected income to meet current and future spending needs. Our research indicates spending on healthcare may increase in retirement but decrease in other categories such as food & beverage, and apparel & services in retirement.

5. Take a long-term view on inflation and the markets

Staying invested tends lead to a better retirement outcome as some of the market's best days occur very close to the worst days. Missing the ten best days over the past two decades reduced the annualized return by almost 50%; missing the top 40 days resulted in a negative annualized return on the original investment.

J.P. Morgan Asset Management helps financial advisors serve their individual clients and DC plan participants by offering industry-leading insights such as the Guide to Retirement, Guide to the Markets, Long-Term Capital Market Assumptions and spending and saving research in collaboration with the Employee Benefit Research Institute (EBRI). The firm also provides a one-stop-shop of digital tools and resources including Target Date Compass®.

To view the full 2023 Guide to Retirement, click here.

About J.P. Morgan Asset Management

J.P. Morgan Asset Management, with assets under management of $2.45 trillion (as of 12/31/2022), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. For more information: www.jpmorganassetmanagement.com. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co., and its affiliates worldwide.

JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America ("U.S."), with operations worldwide. JPMorgan Chase had $3.7 trillion in assets and $292 billion in stockholders' equity as of December 31, 2022. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world's most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

Important Information

The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

SOURCE J.P. Morgan Asset Management