A Shocking Number of Retirement Savers Are Confused About Target-Date Funds
You can probably get by in life without fully understanding chemistry, philosophy, or even algebra. But getting confused about a common investment choice in your 401(k)? That could cost you.
In 2019, MetLife commissioned research among employers, workers, and retirees to understand investors' opinions on their prospects for retirement and their retirement benefits. A key section of that research centered on target date funds, or TDFs. TDFs are popular within 401(k)s; more than 90% of MetLife's surveyed employers offered TDFs as an investment choice within their retirement plans. Despite the popularity, workers and retirees showed a stunning level of confusion about how TDFs work. Specifically, 46% respondents didn't know that the "target date" is the investor's expected year of retirement. And only 51% of respondents knew that TDFs hold stocks, bonds, and other assets.
Image source: Getty Images.
Source Fool.com
