The Great Target-Date Fund Debate: Calculating the Impact of Managing Target-Date Funds "to" Versus "Through" Retirement

Ellement, Jason L.; Lucas, Lori
December 2009
Benefits Quarterly;2009 Fourth Quarter, Vol. 25 Issue 4, p10
Academic Journal
A debate about target-date funds has emerged in the industry. Should a target-date fund glidepath be constructed with the assumption that retirement is the end date ("to retirement"), or should a glidepath be designed to last effectively until the presumed end of a participant's life ("through retirement")? The authors of this article provide various investment simulations under two glidepaths to address the different impact on income replacement ratios of managing glidepaths "to retirement" versus "through retirement." They find that one size does not fit all plans in target-date investing any more than it does in other types of investing, and that the vast differences in target-date fund glidepaths can be viewed as a virtue, allowing plan sponsors to tailor the target-date fund to their particular plan needs.


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