myTDF®: The Next Generation in Target Date Investing
Personalizing a Participant’s Path to Retirement With myTDF®
myTDF® Scenario 1: Anna
Mid-Career Employee With Low Savings
Participant Assumptions: Personalized / Traditional**
Age: 44 / 45
Annual Salary: $62k / $69k
401k Balance: $27k / $110k
Employee contribution: 4% / 11%
Outcome: Anna is a reasonably compensated employee who is anticipated to retire in about 20 years. Anna has limited savings and a below average contribution rate. A personalized approach would allocate Anna to 89% stocks relative to a more conservative approach in a traditional target date.
myTDF® Scenario 2: Juan
Seasoned, Late Career Employee With Meaningful Expected Retirement Savings
Participant Assumptions: Personalized / Traditional**
Age: 44 / 45
Annual Salary: $200k / $70k
401k Balance: $27k / $110k
Employee contribution: 13% / 13%
Outcome: Juan is a highly-compensated, seasoned employee that has accumulated a significant 401k balance. Given his strong retirement prospects, a personalized approach would allocate Juan to lower equity exposure of 31% relative to a traditional approach of 46% stocks.
myTDF® Scenario 3: Janet
Retired Employee With Significant Retirement Savings
Participant Assumptions: Personalized / Traditional**
Age: 68 / 70
Annual Salary: $95k / $70k
401k Balance: $419k / $255k
Employee contribution: 12% / 13%
Outcome: Janet recently retired and over her career was able to accumulate a large retirement nest egg. Given this healthy balance, a “through” approach with lower equity exposure may be more appropriate relative to a traditional approach with a static 40% equity allocation in retirement.
Why Personalized Target Date Funds Matter Industry experts Philip Chao (Nexus338) and Julie Doran Stewart (Sentinel Group) explain why one size fits all retirement investing is falling short. As personalization becomes the norm in everyday life, they make the case that traditional target date funds—built on a single factor, age—leave value on the table. By combining today's technology and participant data, personalized target date solutions can tailor asset allocation to each individual's real circumstances and drive better retirement outcomes.
The Next Frontier in Personalized TDFs Chao and Stewart look ahead to what's next for personalized target date solutions. They frame retirement as a savings challenge as much as an investment one, pairing personalization with auto enrollment and auto escalation features (advanced by SECURE 2.0) to lift savings rates over time. The conversation then turns to decumulation and longevity risk, positioning guaranteed lifetime income as the next frontier—recreating a pension-like stream of income for retirees.
The Five Factors Behind Personalized Target Date Funds Philip Chao breaks down how personalization improves on the traditional model built on averages. Rather than relying on average age, salary, and savings, the approach infuses real individual data across five factors—date of birth, salary, account value, deferral rate, and employer contribution—to project each participant's likely outcome. As a participant's data changes, allocations adjust automatically to keep them on track. The goal, Chao notes, is "not perfection, but improvement."
The Evolution of Target Date Funds: From One Size Fits All to Personalization Julie Doran Stewart traces the shift from one size fits all investing toward personalization in in-plan retirement. She explains why moving beyond a single age factor better reflects each participant's life circumstances, and why personalized target date funds can outperform managed accounts by removing the need for participant engagement. Because they draw on data already held by the recordkeeper, they require little implementation from plan sponsors—needing only a middleware provider to connect participant data to the investment solution.
myTDF represents an evolution of traditional target-date funds by incorporating up to five demographic factors beyond age in seeking to deliver a more personalized default asset allocation with the same ease as traditional TDFs.
Target date funds provide an asset allocation that changes over time based on the average participant’s savings profile, which can lead to suboptimal outcomes. myTDF® takes the simplicity of TDFs and adds the power of auto-personalization so that plan fiduciaries can seek to more closely align a participant's allocations with their individual circumstances.
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Target Date Analysis at Your Fingertips
