Research highlights growing need for personalized retirement solutions as investors age

Research highlights growing need for personalized retirement solutions as investors age
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
AUG 01, 2025

New research from T. Rowe Price, conducted in partnership with MIT's Sloan School of Management and Stanford University, suggests that as retirement investors grow older, their asset allocation preferences and financial circumstances become increasingly diverse.

The findings indicate that personalized investment strategies may be better suited to address the evolving needs of aging participants.

The study, drawing on data from T. Rowe Price’s recordkeeping platform and the 2022 Survey of Consumer Finances, examined how investor behavior and preferences shift over time.

The data showed that while younger investors tend to have similar savings patterns and risk appetites, older investors display a broader range of asset allocation choices and investment goals. This diversity is reflected in both their investment behavior and the dispersion of retirement assets.

According to the researchers, inertia, inattention, and cognitive challenges – rather than risk aversion – are key factors deterring stock market participation. When these barriers are removed, equity holdings among investors tend to align with traditional life-cycle models. 

"Preferred asset allocations and financial circumstances become more diverse with age," the researchers wrote. "Personalized retirement solutions could meet the needs of older participants."

As part of the analysis, researchers compared employees at 191 firms that changed their 401(k) plan designs between 2006 and 2017. Before the change, employees had to opt in to gain stock exposure; afterwards, they were automatically enrolled into their plans, with default target date strategies giving them exposure to equities.

Employees automatically enrolled in target date funds maintained a high allocation to equities – around 80 percent – while those in the opt-in group started with lower equity exposure but gradually increased it over time.

The study also examined the asset allocation preferences of those who moved away from plan default options, dividing them based on whether they made those changes quickly or slowly. Researchers found that both groups ultimately chose similar equity allocations, suggesting that differences in how quickly investors reveal their preferences do not necessarily translate to different long-term allocation choices.

The research also highlighted that investors’ preference for stock market participation remained high – over 90 percent on average – across their life cycle, even though their actual equity participation rates are lower.

When dividing participants into three age groups – 20 to 34, 35 to 49, and 50 and older – the study observed that heterogeneity in preferred equity allocations increases with age. Most young investors favored an equity share above 80 percent, while the oldest group showed the widest range of preferences: a small 10% minority chose to swerve away from equities totally, another 5% went all in, and the majority preferred a 60% to 80% blend of stocks.

“Investment preferences can become more heterogeneous with age due to varied experiences and life events,” the report states."Differences in investment history and financial education can influence risk tolerance. Additionally, major life events such as marriage, divorce, birth of children, unemployment or job changes, health issues, etc., can have significant impacts."

The data further showed that the range of retirement savings expands with age, both in absolute and relative terms. Older investors not only have more varied savings levels but also make more frequent and larger changes to their equity allocations.

Forty-six percent of investors aged 20 to 34 kept their equity allocation unchanged, compared with only 26 percent of those aged 50 and older. Among those who did adjust their allocations, older investors were more likely to increase their equity exposure.

"Collectively, these findings indicate that offering professionally managed personalized investment solutions to aging retirement investors could better serve their needs and preferences," the researchers said. 

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