Many retirement investors are not using target-date funds as intended, and may be losing out on thousands of dollars in returns, according to a study by Financial Engines and Aon Hewitt.
The study, "Help in Defined Contribution Plans: 2006 through 2012," examined the 401(k) investing behavior of roughly 725,000 workers at 14 large U.S. employers.
It found that more than 60 percent of workers who hold money in target-date funds also invest in other funds, and among that group the average allocation to target-date funds was just 35 percent. The funds are based on the investor's target retirement date and invest accordingly in a mix of stocks, bonds and cash with age-appropriate risk.
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