By Joseph Harvey

Americans are increasingly worried about their retirement savings. Almost 80% of working-age Americans agree that the nation faces a retirement savings crisis, according to a 2024 survey by Greenwald Research -- up from 67% in 2020. And more than half the workers in that study, 55%, are concerned about achieving financial security in retirement.

Wall Street is listening. Private-equity and private credit funds have set their sights on the trillions of dollars Americans keep in their retirement saving accounts, arguing that 401(k)s ought to include private assets in order to boost returns. Adding to the momentum, President Donald Trump recently issued an executive order directing the Department of Labor and the SEC to review its restrictions on alternative assets, including private-equity funds and cryptocurrencies, in 401(k) plans.

I welcome giving Americans more choices in their 401(k)s, especially at a time when the unfettered stock market returns of the last 15 years appear to be far less certain going forward. At the same time, major financial institutions and wealth managers are expressing valid concerns about the fees and liquidity risks in private markets strategies and how they may not be fully aligned with the needs of individual retirement accounts.

But there is another option. Listed real assets -- real estate, infrastructure, commodities, and natural resource equities -- are already available in regulated mutual funds and other vehicles in 401(k) plans.

Listed real assets have historically generated strong returns over full market cycles and have -- with the exception of commodities -- delivered performance approaching or better than global stocks over the past 30-plus years. At the same time, defined-contribution plan menus have historically been short on diversifiers for portfolios consisting largely of core equity and fixed-income strategies. That's especially true of target-date funds, the vehicle of choice for many retirement savers.

Diversification benefits. Listed real asset funds, which blend allocations to real estate, infrastructure equities, commodities, and natural resource equities into one portfolio, offer daily liquidity, and pricing transparency. As such, they can work for clients approaching retirement who have too many style box financial choices in their 401(k)s and not enough diversification.

A recent analysis of core REITs -- the most common form of listed real estate assets -- from Cohen & Steers using Bloomberg data, showed that a plan participant with a 10% listed real estate allocation in their 401(k) could extend their retirement income by seven additional years compared with an investor in a typical target-date fund. And while private assets are often considered to be less volatile than listed assets, the reality is that private markets have their valuations updated less frequently, meaning returns are smoothed even though the volatility of the underlying assets may be equivalent.

Listed real assets are compelling when capital preservation, access to funds, and diversification in traditional portfolios becomes paramount. It's understandable that investors aren't thinking beyond stocks and bonds for retirement currently. After all, from 2009 to the start of 2022, the S&P 500 averaged total returns that approached 16%. But since then inflation has reared its head and correlations between stocks and bonds have been historically high.

Reduced inflation risk. With stocks at all-time highs, I believe too many investors have been lulled into a false sense of security. The goal of portfolio diversification is to own asset classes that tend to experience their above- and below-average returns in different economic and market environments -- when one asset zigs, the expectation is that another will zag. Real assets have historically done just that when compared with stocks and bonds, providing diversification that many retirement savers lack.

A multiasset-class approach to listed real assets has the potential to create lasting value for retirement investors in the form of regulated, liquid and lower-cost vehicles already available to retirement savers. They are available today, and can be a permanent resource for long-term investors, helping them transition from accumulation to distribution with potential for lower inflation risk.

Joseph Harvey is CEO of Cohen & Steers and a director for the firm and its mutual funds. He joined the firm in 1992 as a REIT analyst. Previously, he was an analyst at Robert A. Stanger & Co.

Editor's note: Guest commentaries like this one are written by authors outside the Barron's Advisor newsroom. They reflect the perspectives and opinions of the authors. Submit feedback and commentary pitches to advisor.editors@barrons.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 23, 2025 12:07 ET (16:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.