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Common Sense Comments for Workplace Retirement Plans The technology revolution has disrupted dozens of industries, with nimble startups doing a better and more transparent job of serving the customer, and traditional companies paying the price in lost market share or even extinction.
What’s needed now is a similar revolution in the retirement-plans industry, with small, independent thinkers retooling how workplace retirement plans are built and delivered. We're not talking lipstick on a pig -- we're talking entirely new thought processes. Common Sense Comments for Workplace Retirement Plans Some people love to shop — love the challenge of hunting for the best deals and scoring the highest-quality stuff for the lowest possible price. Perhaps you’re like this. Even if you’re not, you’d probably still want a power shopper in your corner when making big-ticket buying decisions.
Others have so much money that they don’t care. They buy what they want, when they want it, and don’t even look at the price tag. You probably wouldn’t want this sort of person making big buying decisions on your behalf. Unfortunately, that may well be happening with one of the most important shopping decisions of your life — which investments to put your retirement savings in. Common Sense Comments for Workplace Retirement Plans Target Date Funds are prevalent in workplace retirement plans. You’ll find them other places, but overwhelmingly they are found in things like 401(k) Plans. The idea behind them and their appeal is fairly easy to understand. People want a point-and-shoot “do it for me” option when it comes to how to invest their money for retirement.
These types of investments are easily identified by the numbers in their titles, such as “2040” or “2060”. The design of these types of investments is made to be point-and-shoot; investors simply select the year that is closest to when they think they might retire. A 55 year old, looking to retire at age 65 might then select the 2025 fund, since that’s about 10 years from now. Easy enough, right? |
Caricature of Jonathan Broadbent by David Helton
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