Working Today For Your Tomorrow

Target Date Funds

saving for retirement image

A Fund for the Rest of Us

“I know I need to save extra for retirement. But the investment choices are overwhelming and I'm not sure what to do.”
Is this you? You’re not alone. According to a March 2014 article in The Wall Street Journal, many adults avoid making savings and investment decisions because they think it’s too complicated (45 percent), don’t have enough time (37 percent) or don’t know how to get started (18 percent).

It's Easy on Autopilot

Tandem, KPERS' 457 savings plan, has an option to make investing easier – Vanguard Target Retirement Funds. Many other financial services companies have similar types of target date funds.

Rather than choosing a mix of asset classes (stocks, bonds, cash, etc.), you simply choose the fund with the target date closest to the year you plan to retire. It’s that simple.

A target fund gives you a diversified portfolio in a single fund, with investments in thousands of individual stocks and bonds to help reduce investment risk. Target funds are designed to be aggressive early in your career and gradually become more conservative as you approach retirement. This is called the glide path. Vanguard has a video that explains the glide path.

You just think about when you want to retire, and the fund does the rest. Portfolio managers handle the asset allocation and rebalancing to keep your investment allocation on target.

Investing Doesn't Have to Be Complicated

You know saving for retirement is important, so don't let investment decisions get in the way. You may not check the daily stock ticker or subscribe to the Wall Street Journal, but that doesn't mean you should stuff your savings in a coffee can.

If you want a fund for the rest of us, you may want to look into a target date fund to simplify your investment decisions. Check with your employer's voluntary savings plan (like a 457(b) deferred compensation plan or 403(b) annuity) or with a qualified financial services institution.