For years, the formula for DC retirement investing was relatively simple. You help clients build wealth during their careers, then gradually dial down risk as retirement nears. That approach worked well when retirements were shorter.
Today, retirement looks very different from what it did even a generation ago. Americans are living longer and retiring earlier than planned, at an average age of 56,1 which means there are fewer years to save and more years to fund. At the same time, only 12% of retirement savers have set aside enough to last ten years or more after they stop working.2
This widening gap has brought longevity risk, the chance of outliving your savings, to the forefront of DC retirement planning discussions. As an advisor, you want to broaden your conversations to include planning for a longer retirement.
Retirements may span 30 to 40 years, requiring portfolios that can continue generating growth long after leaving the workplace. This presents a challenge for traditional DC target-date strategies, which gradually shift to conservative investments as retirement nears. While this approach may help reduce drawdown risk, it can also limit growth potential at the point when longevity risk starts to increase.
The question is, how do we create more durable portfolios? One answer is to find new sources of long-term growth, income, and diversification, such as private asset alternative investments.
More high-growth and innovative companies are in the private sector, delaying or avoiding going public altogether. This means a growing share of economic growth is occurring outside traditional public markets.
Private assets—such as private equity, private credit, and real assets, i.e., infrastructure and real estate—give investors access to private companies, projects, and income-producing assets. When added to a traditional DC portfolio, private assets can enhance diversification and bring new sources of long-term growth and income.
Earlier this year, ERISA issued a framework for evaluating and selecting private assets within DC plans, making it easier for you to access nontraditional investments for your retirement plan clients.
In DC plans, private assets are typically integrated into professionally managed vehicles, such as target-date funds and managed accounts. For example, a modest amount of private assets is added along the glide path of an existing target-date fund, which is then repackaged as a collective investment trust. The CIT structure allows for recordkeeping credits and other discounts to help reduce plan costs.
Private equity can provide access to companies and growth opportunities not typically available in public markets, while private credit may offer attractive income potential through loans made directly to businesses. Certain private assets, such as real estate and infrastructure, generate recurring revenues from rents, tolls, and usage fees. These income streams are often contractual and inflation-linked, helping to preserve purchasing power in retirement.
When combined with traditional stocks and bonds, private assets can provide diversified sources of growth and income, while still supporting daily valuation, liquidity, and benefit responsiveness through careful portfolio construction. The result is a potential new source of alpha and income that can help create more durable DC portfolios.
Managing sequence-of-returns risk becomes more critical in earlier retirements. Since private assets’ values are less correlated with daily market swings, they can help smooth out portfolio volatility over time. Within a target-date glide path—especially as derisking begins closer to the target date—private assets’ volatility dampening may help reduce drawdown risk and improve long-term outcomes.
Interest in private assets continues to grow, particularly among younger investors. More than 70% of investors ages 21 to 43 believe traditional asset classes alone may not deliver the returns they seek.³ As plan sponsors look for ways to improve longevity preparedness and meet evolving participant needs, private assets can be a valuable addition to the DC retirement plan toolbox.
Private assets are not a stand-alone solution to longevity risk, nor are they appropriate for every DC plan. However, they can complement traditional assets by providing sources of long-term growth and income, enhancing diversification, and smoothing out portfolio volatility over time. Adding private assets into professionally managed DC vehicles may help your clients and today’s workers live longer and better in retirement.
1 Manulife John Hancock Retirement commissioned Edelman Public Relations Worldwide Canada to conduct the 2025 financial resilience and longevity survey. Manulife John Hancock Retirement and Edelman Public Relations Worldwide Canada are not affiliated, and neither is responsible for the liabilities of the other. 2 Q2 Happy Retirement Report, Pension Bee, 5/5/26. 3 “Younger investors are driving a shift toward alternative investments,” Forbes Finance Council, 7/1/25.
This article is produced in partnership with Manulife John Hancock Retirement
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