Introducing The Next Generation in Target Date Investing, myTDF®
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.
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.
DC Consulting Study Insights: The Rise of Target Date Funds as a Retirement Income Solution
Explore why target date funds are increasingly repurposed for retirement income and how to assess their effectiveness in supporting retirees.
Target Date Analysis at Your Fingertips
