Retirement Insights

Investment Matters: Improving Retirement Plan Menu Design

Investment Matters: Improving Retirement Plan Menu Design

While Target Date Funds (TDFs) have grown in prominence, over 50% of assets are still invested in the Core Menu of investment options. The Core Menu should enable the participants who opt out of TDFs to build portfolios that enable them to achieve their objectives. Data provides evidence on which participants are opting out and what they are looking to accomplish.

Topics to be covered:

  • The evolution of 401(k) menus & TDFs.
  • Which participants use TDFs & which opt out.
  • Investor objectives during the phases of retirement saving.
  • Whether more fund choices increase the use of QDIAs.
  • How to Measure What Matters: Wealth Accumulation over the participants time horizon.

 

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Qualified Default Investment Alternative (QDIA) is a default investment option in a 401(k) or other retirement plan where contributions are automatically invested if participants don't make their own investment choices, offering fiduciary protection to plan sponsors. 

Target Date Fund (TDF) also known as a lifecycle fund, is a type of mutual fund that automatically adjusts its asset allocation (the mix of stocks, bonds, and other investments) to become more conservative as the target retirement date approaches. 

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