An Efficient and Balanced Approach to Retirement Saving
Jerome Clark, portfolio manager of the T. Rowe Price Retirement Funds, aims to help investors sustain their savings throughout a long retirement.
Clark is a seasoned expert in efficiency and process. He was a captain in the United States Marine Corps and spent three years as a mathematics instructor at the U.S. Naval Academy. He earned a B.S. in mathematics from the U.S. Naval Academy, an M.S. in operations research from the Naval Postgraduate School, and an M.B.A. in finance from Johns Hopkins University.
Clark joined T. Rowe Price in 1992 as a government analyst in the Fixed Income Division. He then became a fixed income portfolio manager and later helped to design and launch the T. Rowe Price College Savings Plans. He repeated the process when he helped launch the T. Rowe Price Retirement Funds in October 2002.
MANAGING ASSET ALLOCATION
One of the most common missteps investors make in their retirement strategy is to over- or under-allocate their stock holdings. "Our funds offer a more balanced approach," says Clark. "We have a long-term focus on lifetime income, and we never lose that focus, no matter what the market brings." Investors select a Retirement Fund based on the year they'll turn age 65. Clark and his team of professional portfolio managers and analysts shift each fund's asset allocation up to and through the target date, following a set trajectory—or glide path—to balance risks. The Retirement Funds have target retirement dates ranging from 2005 to 2055; depending on your risk tolerance and time horizon, you may wish to consider a Retirement Fund with a different target date.
TAKING A TEAM APPROACH
Today, Clark works closely with a team of 15 analysts and cash flow specialists on portfolios with about $80 billion in assets. Clark credits the firm's long-tenured investment team as the greatest strength behind the funds. "I've worked in investment management at T. Rowe Price for 20 years, and I've seen bear and bull markets come and go," he says. "When we're in these extreme market environments, we don't panic—we see them as long-term opportunities."
The Retirement Funds are not guaranteed at any time, including at or after the target date (when investors turn 65). The funds' investment strategies change over time from growth to a balance of growth and income and, finally, to more of a focus on income and principal stability during retirement. The funds' substantial allocation to equities both prior to and after the target date can result in greater volatility. Diversification cannot assure a profit or protect against loss in a declining market.