Each month we provide our plan sponsor clients with a participant ready communication piece. All participant corner documents are saved to your Fiduciary Briefcase. Once logged into your account, click on Briefcase > Participant Services > Employee Memos.
To download a copy of this Participant Corner Memo, click here to login to your fiduciary briefcase, or contact info@definedplanadvisors.com to get a pdf version that you can distribute to your employees.
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A target date fund (TDF) can simplify retirement investing by providing a diversified portfolio in a single fund. It automatically adjusts its investment mix over time, generally becoming more conservative as you near retirement. Understanding how TDFs work can help you feel more informed about the investment in your plan account:
• Understand its intended use. A TDF is generally designed to function as a complete retirement portfolio. Adding other investments can change your overall allocation and level of risk, potentially working against the fund’s built-in strategy.
• Know what the year means. TDFs typically come in a suite of “vintages,” each named for a target year. The year generally reflects when someone born around a certain time may plan to retire, and the fund’s mix of investments adjusts as that date approaches.
• Know the glide path. A fund’s glide path describes how its mix of investments changes over time. Some funds follow a “to” retirement path and others a “through” retirement path. Review the fund’s information to see how it works, and revisit your selection if your expected retirement date changes.
• Look at the details. Funds with the same target year can differ in investment strategy, glide path, and fees. Fund fact sheets and your plan’s investment information can help you compare.
• Remember there are no guarantees. A TDF is not guaranteed at any time, including at and after its target date, and it does not guarantee sufficient income in retirement.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. This material is provided for general and educational purposes only. It is not intended to provide legal, tax, fiduciary, or investment advice. If you are seeking legal, tax, or fiduciary advice, consult an appropriate professional.