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Workers need more education on target-date funds

Unsophisticated investors may end up with "inferior" portfolios.

By Danielle Andrus | Updated on December 18, 2009

Since the U.S. Labor Department’s decision to allow employers to use target-date funds as a qualified default investment alternative in 401(k) plans, use of the funds in retirement plans is rapidly increasing, the Employee Benefit Research Institute writes. At the end of 2008, nearly 7 percent of 401(k) assets were invested in these funds. They were most popular among workers in their 20s, with 15 percent of young workers opting for the “all-in-one” investment option, while only 6 percent of workers in their 60s chose the funds.

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