As the new year ushers in a new administration with policy changes on the horizon, Natixis Investment Managers today issued a wide-ranging press release with a variety of investment professionals from Natixis and its affiliated investment managers predicting where markets are headed this year.
One of particular note to retirement plan advisors comes from Liana Magner, Head of U.S. Retirement and Institutional for Natixis Investment Managers. As outlined in the Natixis Investment Managers 2024 Global Retirement Index study, she said four significant retirement risks face U.S. retirement savers today: interest rates, inflation, public debt and investors themselves.
“The good news for 2025 is that some of these risks may abate, including interest rates, which are headed down, and possibly inflation which has been moderating. On the flip side, uncertainty remains as a new administration takes over,” Magner said.
What does this mean for 401(k) retirement plans? Magner offered a look at the key risks and opportunities for plan sponsors and advisors as well as plan participants to address these risks.
“First, take interest rates. With rates decreasing, participants and their advisors should consider whether they are holding too much in cash or sidelining more than needed,” Magner said. “Retirement is a journey rather than an event, requiring a long-term approach to investing, which incorporates exposure to a diversified portfolio of stocks and bonds. If they need retirement income more urgently, there are now available income-oriented options to consider, both guaranteed and not.”
Second, with inflation tamed but not beaten, Magner said participants should be prepared to save more and invest wisely.
“With rates decreasing, participants and their advisors should consider whether they are holding too much in cash or sidelining more than needed.”
Liana Magner, Natixis Investment Managers
“Employers should ask themselves whether the plan they offer is fit for purpose in terms of plan design features as well as investment options offered. Does the plan offer auto features? Does the plan offer a range of investment options, including actively managed portfolios which can take advantage of a bifurcation in stock performance, and tools to educate and drive employees to engage and participate? Relatable investments such as domestic stock funds can help meet participant preferences, as these are among the most popular investment options after target date funds,” Magner said.
While the level of public debt is not something employers or participants can control, Magner said growing concerns about relying on public and private pensions are evident in Natixis’ long-running survey which showed that over three-quarters of individuals believe it is increasingly their responsibility to fund retirement on their own.
“Yet frequently individuals are their own worst enemies with unrealistic investment return expectations,” she said. “Beyond providing education, advice and tools, employers can ensure that their plans offer professionally managed portfolios including multi-manager diversified options and the inclusion of alternative asset classes.”
As individuals increasingly take charge of their retirement planning, Magner concluded that financial service providers must become more proactive in supporting them. “It’s crucial to offer fit-for-purpose personalized solutions that address both the current landscape and individuals’ specific retirement needs.”
Click here to view today’s complete press release featuring views of 10 different investment professionals.
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