A useless statistic on Target Date Funds

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

I’m not a big fan of target-date funds and that bias goes back to the implosion of the stock market in 2008-2010, where I thought older workers didn’t realize that their target-date funds had so much equity exposure. I also question the funds’ glide path, as well as no consistency between funds with the same target year across all the fund families.

A recent study stated that retirement plan participants who invest in target-date funds contribute less to their plans than participants who don’t use them. Quite honestly, the results are skewed when many automatic enrollment options use target-date funds as the qualified default investment alternative (QDIA). So many people that use target-date funds, only use it because they are automatically enrolled.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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