Retirement plan design should account for individual needs and multiple paths. Advances in technology are fostering the creation of fresh solutions that can address diverse retirement needs – and meet people where they are on their savings journeys.

Fortunately, because of technological innovation, the expansion of personalized goals-based solutions may help individuals to better meet their long-term retirement savings needs.

Corporate sponsored programs have made considerable progress with automatic enrollment, automatic contribution escalation and target-date funds, yet many individuals still struggle to fully prepare for retirement. This problem is more acute for certain demographics, particularly women: they are four times more likely to feel behind schedule than their male counterparts.

Competing financial responsibilities can have tremendous negative impacts on retirement savings efforts, whether from major life events such as job and salary changes, educational expenditures, marriage, divorce, health and nursing home care and other family obligations. The required savings that will meet projected retirement needs can quickly and drastically increase.

Goldman Sachs Asset Management's latest Retirement Survey and Insights Report highlights how commonly retirement savings can be impacted by other life events:

• 40% of working respondents took time away from work to care for family, of which 40% withdrew from their retirement savings and 23% stopped saving for retirement.
• 33% of retirees experienced a financial hardship during their careers, of which 45% had to stop saving three or more times to pay for other needs (e.g., child's education).
• 51% of retired respondents retired earlier than expected, often due to health issues.

Personalization and goals-based solutions

Retirement plan design often applies a path that assumes the retirement savings of the average participant are on track. This typically is set at the plan level, not the individual level, and it may not meet investors where they are. Plan features are often designed to get individuals started, expecting them to personalize strategies later, but doing so from the outset can bring advantages.

Goals-based solutions can help individuals bridge retirement savings gaps through savings and investing guidance that is aligned to achieve each person's desired retirement savings goals. They can present the true picture of what the individual will really need.

A technology-enabled managed account platform can provide two key benefits:

• Personalizing retirement strategies to each individual's unique circumstances, and
• Adjustments based on life or market events that can recalibrate those strategies.

Technology allows advisors and asset managers to personalize the retirement saving and investing  experience by identifying retirement income goals based on investors' salaries, target retirement age, spousal information and other factors, then considering their accumulated savings, rate of future savings and outside savings accounts, if applicable. Together, this information is used to determine whether investors are on track.

Personalization can better align asset allocation strategies to take more investment risk, to close a retirement savings gap, or take less risk if individuals are projected to meet their goals. People can have vastly different experiences putting away savings and navigating the financial markets. The objective is to increase the likelihood of achieving the savings each individual will need.

As circumstances change, technology-based solutions can dynamically recalibrate asset allocations and contribution strategies. Given the importance of investment compounding, leveraging technology to timely recalibrate can help avoid delays and maximize the time adjustments can work to close savings gaps or reduce risk to maintain existing savings.

By helping plan participants account for the myriad events that can push savings behind schedule and help them keep what they already accumulated, technology-enabled personalized goals-based solutions can help improve retirement saving outcomes for many Americans.

Chris Ceder is a Senior Retirement Strategist at Goldman Sachs Asset Management

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