Those who follow this blog and/or follow me on various social media platforms know that I am not a huge fan of Target Date
Funds. I discuss some of these concerns in a recent post.
Beyond that, however, the whole notion of taking such a hands-off approach to investing for one’s retirement just rubs me the wrong way. I’m all for making this as easy and painless as possible for plan participants, but simply putting one’s money in a TDF can foster the idea that doing so will magically get you to where you need to be at retirement.
Retirement planning takes work. Whether you do it yourself or use a financial advisor you need to track your progress at least annually. Moreover, you need to start out with a goal. That goal should be something like I need to accumulate $x by this date. Ideally along the way you will be tracking your progress by setting interim accumulation goals. Many retirement planning software programs allow for this type of analysis.
Allocating your 401(k) account should not be done in a vacuum. Instead, make sure that your 401(k) is allocated as part of your overall portfolio. This might include a spouse’s 401(k), IRAs, taxable accounts, stock holdings, bonds, mutual funds, etc. Your overall investment strategy should be an outgrowth of your financial plan.
If you need some help with your 401(k) or any part of the financial planning process please feel free to contact me for assistance.