The combined drop in equities and falling treasury yields in the first quarter increased the present value of retirement savings across all future retirement dates. Later retirement dates saw the most significant jump in the amount needed to be saved today to provide $1 per year for 25 years after retirement.
Those planning to retire this year needed $23.80 saved for every annual dollar received over the 25 years after their retirement date at the end of 2019. That number rose to $23.47 by quarter's end. On the far end of the spectrum — those with an expected retirement date of 2065 — the amount needed to be saved by the retirement date increased by $5.11. Nearer retirement dates benefited from higher allocations to treasury inflation protected securities, which helped mute the impact of inflation.
The projections, calculated by S&P Dow Jones, are based on its Shift To Retirement Income and Decumulation indexes, which measure the performance of a liability driven investment strategy that incorporates a multiasset traditional glidepath approach with a focus on theoretical inflation-adjusted retirement income. Each vintage reflects a target year for retirement.