Make sure your retirement planning tool is telling the truth.

It’s clear that target date funds are the leading default investment option for the defined contribution industry. Research from Vanguard and Morningstar shows tremendous growth in the TDF market. Participants who are automatically placed in TDFs should consider the tools and services they are offered to help them accurately plan for retirement.

We believe that every participant deserves to know how a TDF may impact their retirement goals. Not a single fund provider gives participants personalized retirement projections that consider a TDF glide path. This is a very big problem.

For example, a 25 year old participant may be placed in his provider’s 2050 TDF. This fund is sold with an ‘invest and leave it’ label, and he is assured that as he ages, his investment will be managed appropriately and properly contributed to.

To plan for retirement, he can enter his information into his provider’s retirement planning tool. When required to select a between a conservative, moderate and aggressive investment strategy, he decides that aggressive is the appropriate choice for a 25 year old.

The participant is relieved when the retirement planning tool estimates that he will have $1,893,000 when he retires at the age of 65. But this assumes an aggressive strategy for the next 40 years! The 2050 TDF will not maintain an aggressive allocation during this entire time.

PlanOutcome gives participants a retirement planning tool that considers a target date fund glide path. If the same participant received a PlanOutcome retirement projection based on his 2050 TDF, he sees an estimated retirement wealth of $982,000.

Which projection will encourage the participant to properly save for a retirement goal? If the defined contribution industry continues to offer TDFs as a default investment option, participants should expect retirement planning services that actually consider their investment.

See how PlanOutcome’s retirement planning tool can accurately project your target date fund