Since 1996, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) have worked together on collecting and analyzing annual data on millions of 401(k) plan participants’ accounts. This report analyzes 401(k) plan participants use of target date funds using year-end 2018 data from the EBRI/ICI 401(k) database.
For all of the figures in this report, components may not add to the totals presented because of rounding.
Key Findings:
- Target date funds have grown in popularity. At year-end 2018, more than half (56 percent) of 401(k) participants in the EBRI/ICI 401(k) database held target date (or lifecycle) funds. Target date fund assets were more than one-quarter (27 percent) of 401(k) plan assets in the database.
- Target date funds offer professional management of a diversified portfolio that rebalances over time. The EBRI/ICI 401(k) database has information on 401(k) plan participants’ holdings of target date funds, whether structured as mutual funds, collective investment trusts, or separate accounts. Target date funds offer a complete portfolio for investors. A target date fund holds a diversified portfolio of both stocks and bonds and also rebalances to become less focused on growth and more focused on income as the fund approaches and passes the target date.
- Younger 401(k) participants are more likely to hold target date funds than older participants. At year-end 2018, 62 percent of 401(k) plan participants in their twenties held target date funds, compared with 50 percent of those in their sixties. Similarly, 51 percent of 401(k) plan assets of participants in their twenties were invested in target date funds, compared with 23 percent among those in their sixties.
- Overall, 401(k) plan target date fund investors had slightly higher allocations to equities compared with 401(k) plan participants not holding target date funds. 401(k) plan participants often tend to invest in equities through equity funds or the equity portion of target date funds, and also through company stock and the equity portion of non-target date balanced funds. At year-end 2018, overall, 401(k) plan target date fund investors had 66 percent of their 401(k) plan assets invested in equities, compared with 60 percent for 401(k) plan participants not holding target date funds. The youngest 401(k) plan target date fund investors had the highest allocation to equities compared with their counterparts not holding target date funds. Older 401(k) plan participants had similar allocations to equities whether they were target date fund investors or not.
- Younger 401(k) plan target date fund investors hold a higher concentration of their accounts in target date funds than older 401(k) plan target date fund investors. At year-end 2018, 88 percent of 401(k) plan participants in their twenties holding target date funds held more than 90 percent of their accounts in target date funds. About two-thirds of 401(k) plan target date fund investors in their fifties and sixties had such a high concentration.
- The vast majority of 401(k) participants investing in target date funds hold one target date fund. Ninety-four percent of 401(k) participants owning target date funds held one target date fund at year-end 2018, with little variation by participant age. Ninety-seven percent of 401(k) plan participants in their twenties holding target date funds held one, compared with 93 percent of 401(k) plan target date fund investors in their fifties or sixties.
- 401(k) participants holding target date funds typically are invested in target date funds appropriate to their age. For example, among 401(k) plan participants holding one target date fund, 91 percent of those in their twenties held a target date fund appropriate to their age, similar to those in their fifties. Nine percent of those in their twenties held a fund with an earlier target date (making them young for the fund), compared with 5 percent of those in their fifties. The remaining 2 percent of those in their fifties held a fund with a later target date (making them old for the fund). Overall, among 401(k) participants with target date funds, the vast majority (88 percent) held one age-appropriate target date fund.
- Target date funds held in 401(k) plans tend to be held by appropriately aged 401(k) plan participants. For example, 83 percent of 401(k) plan participants holding 2040 target date funds had ages in line with reaching age 65 around 2040, while 96 percent of 401(k) plan target date fund investors in the 2035 funds were appropriately aged.
Figure 7 Figure A1 Categorization of Age-A Fp ig pu rro ep 8riate Target Date Funds Figure 1 Target Date Fund Use Is Higher Among More Majority of 401(k) Participants Holding One Target Date Year of 65th birthday, by participant age at year-end 2018 Target Date Funds Are Diversified and Rebalance as the Fund Approaches and R Y Som 4 C Thi Fi Uoung .g 0 o e Sur s p .1 nc fe e D e( a of e e r k) 6, lus tr p e t in e a t40 nc A he r rP n o tc tion 1( m a r lan oss e v re k g f a as nt )e r ia p tg A of la tTar d e ll A ion in a -n p a L te p a g p b e ge a fun r or s, Ea rop taic , lloc t dipa rE s. iDa a m ca th nt A e p t b ion to e loy 40 s w t tout a e 1( re g e e Fund I e k tr w e ) tB d q o e P m ne a uit - la tor thir n Ta efit ie e fun d s s Se nvest lik s of rre g d eflect ly e cinv tur 40 tD o it e s 1( a o y st hold tt k e r he A ing ) s d Fp m und fa t la a a ini c ls n ta rtg o sIte tnv ha is rtra g d e tt ee ion. a st v 40 ttide e or d 1( a fun 20 nt Te tk e) 13 d nds w fun p she . la t“ d ha n p n tFa o inv n o ac B a na tre e tShe lde st ic ly in ip or ze rOne e a s in t d p tnt : afr s hold rTa tom Ta ic he ripa g r g ir t ehe e t ing nt fif tD s. For D t taa ie ta ta re s a tg re g e Re e t Fu nd e td txa ir nd d asi e a tm e m xt t............ e pfun e ie le fun nt s, d ha 62 d s’ sd 10 Sarah Holden is Senior Director of Retirement and Investor Research at the Investment Company Institute (ICI). Jack Target Date Funds: Evidence Points to Growing Popularity FR un ed ce H ne tlly d H Fiu re nd d 4 A0 p1 p (k ro ) p Prlia an te P ta or t T ic hie pia r n Atg se Illustration of average asset allocation of target date funds 12 t p Fu pee e nd S nds.” r rc spe ee etnt o Fi c tb g of A iv su e ure ve a c 40 y . h a ila oung For 2. 1( b In le k high ) e e a xa a p rtd ; la m d w if t c n p iti onc p wo le he w a n,e r ., y d ta n Bri ic ol.g t a t r ipa ry a g ee thtS ov ion. a hold nt r- /s s in t ce oit nd ing p e es he 20 /do aa nd g ir 18 e lgo t Inve -, w atv p e y/f p nt p srile ic tme op ie a s s he lly r/E ia nt B tm e Comp ld SA or funds, t/e a a rb tg aha out ny etn 80 p td - hose Ins e ab ttit e sa ute fun e fun /our rc d e d 2021 s a nt -s a w cof tt ould iv y re e 40 itp a ie o r 1( s - ha rts /r e knd ) v e a e sour t a ri 20 highe rsg ing 18 e ce t , -d tre r ca a e a nd tnt nd lloc e e fun tin ra a /f rtthe g a ions de c inv tt - o d sh t ff e ao e e st te ring e e or tq fun s/ uit s in a to a d if e r g se . t- VanDerhei is Director of Research at the Employee Benefit Research Institute (EBRI). Steven Bass is an economist at B I n r right ece Sc nt op ye e aarnd s, tIanv rge est t d maetnt e f unds ha Company ve I ns grow titut n to b e. 20e 2 1. an Th intee g Brra ig l p hta Sc rtop of e40 /IC1( I k D)e p fin lae n d d C eont sign, ribut prov ion P iding lan P a d rofile iversi : fied A C lose and Appropriate Use by 401 Ye(k ar-e ) ndPlan 2018 Participants Percentage among 401(k) plaF ni g pu arre ti ci 6pants holding one target date Figure 7, Categorization of Age-Appropriate Target Date Funds .............................................................................. 11 ta a g A dss iv a m rg te e e ong e n ta t -t s w re d ta p ir re te g a e re r m e tfu tic e 51 d nd ipa nt a ts - p e nt fun e in fun rs in t cld a es.pd rg d nt e w he of 401( e fir .rt e he t w tk he ir e ) nt p 40 a la ie p 1( ns p s, t r k ’ o )inv hose p p rla ia esn a ttme ehold a ss g nt e eing t slis (F ne for tup aigur r the g s.e e tfun d 3) a. d te H ( fun Fi alf of gur ds ha e40 9)1( d . Mid 87 k) p p -la d ee r n p cce ant a dre to ic tf th a ipa rge e nt ir t s in d 40 at 1( e the k fun )ir p dsi la s t xt n a e ie nde ss s he ed ts ld to ta ha rgve et I op L 40 C ook a I1( t. ion th Mik k) tp e 40 la a C tn p 1( rross e ka b ) ra , P tla ic E laipa nc B ns RI e , nt s t 20 Ss hold e o 18 nior b. ec Sa ing P om rn D og e ta rm ie r ag m g or eo, m te d e C foc a rA ta e : us n B fun de r ight d Dd a on s t tSc ae inc S op nd pe om etc , o ia a eha lis nd atv nd , W ep high r a le ov sh sside ingt foc conc don, us da e etnt d D a r C on a a: ss tions Ig is nv rtow a e nc st of tm h et. he e aThi nt s it ir C s aa o c Ip m c ss p ount p ue roa any B c s in he rIie ns s a ft the w itnd a use s w tep. fun arA ss itvtd e a es s t ila n , b he le fund by participant age, year-end 2018 Across All Ages, Each 401(k) Plan Target Date Fund Investor Tends to Be in One • The vast majority of 401(k) participants in Fig ves ure ti n Ag 4 in target date funds hold one target date fund. Figure A5 Cash inv t dhe ate e highe st fun ed din e st s, a pq r nd op uitor t ie as, c rtg ions eo t m d of a pta e ar g e funds w e d- a wpitph 56 p rop ere ria 23 e te r cp 40 ee nt r1( c e a knt m ) tong a of rgt e he tthose d ira 40 tenot 1( fun k )hold d p inv laing n a estss tor ae rstg , s. eatlt Som d houg ate e fun h th of tdhis e s 20 ( Fi pa 65 gtur t efun e rn is d 4) d. ha Thi rd ivs d e an b ttiff rae yc rte enc d e By with a Sa ss ra isth anH ce old from eP n e , trhe cIC en I tI; a ns g e tJa it o ut fck Va 4 e0 ’s r 1(ke )sea nD Plar ne c h a P rh are tnd ic i, ipe EBRI ad nit tsor Hia o ;l l da st innd a g ff Ta s. A S rgte e n t ve y D v an Ba ie te w Fu s e ns dxpr s s, eIC ssI e d in this report are those of the 13 t a r a e tr flect w ge w t w ing d.ic ate i.or the of ir gt /f he dile e si s/ fun g20 n to p d21 . A/2 ltrh 1 ooug v _pp ideh ta r _dc a crom p gla etp n_pr r de ahe te ofile ns fun iv_4 d e s a 01 ass rke e .p tm d afor lloc . e a w tion ide, lya us nd ep doss amibly a ong y s a oung resu er ltinv of eb steor ing s, w the ho dm efa ay ult ha ve Annual surveys by the Plan Sponsor Council of America (PSCA) have reported the spread of automatic enrollment and the Fi gure 8, Majority of 401(k) Participants Holding One Tar Ta gertg D eta D te a tF eu Fu nd nd Held Fund Appropriate to Their Age ............. 12 September 9, 2021 • No. 537 401(k) Participants Holding One Target Date Fund by Fund Date U.S. Socia Nl Se inetc yur -four ity A pd em 4 8rc 0 ie nis 1nt (k t rof )a T tion. 40 ar1( ge 20 kt) 21 D pa a . rtt“ e ic Re F ipa t u irn nt ed m s ow e In nt vnin e Bs eg tne o tra fit s r's: Re g A etg d eta ir D te ei m s fun ternt id b s h u Atgie o eld n C a one blc yul F a ta u tr or n gd .” et D A dv a aa t te e ila fund ble a a t t 17 year-end v na som arria row et ion old s a e in job m r inv ong e tst old enur ore sr e (a .in t g A ehe tg yrir e oup afor r-s. A e tn ied s, fift m 20 ong 18 ie , s, a p57 art nd ic pe ipa rsi cxt e nt nt ie s in s) of , t40 p he e1( rir ha kfif )p ts r pie las, t en p achose hin artg ic ipa hold fornt m ing s w oretit ah t erxpo ge wto su dor a rte e fe tfun o we ed q r s ha uit yeie ard s. s of 63 tpeenur rcee nt he of ld Target Date Alignment With Participant Turning Age 65 a b inv ut ee e hor n mor stm s, a ent end lik thr sh eoug ly ould tha h a n o not utom lde ber a a tw isc cor e ribe k nr eollm rd s t to o et ha nt he . v For e offic be e e exa n o rs, t mff p re le us re , td e 88 ets, or a p re gr ec te ot d nt he a tof e r fun sponsor 401( ds w k) s of p he lan th n ta EBe r R y gI e , etE nr d Bolle a RI te- d E fun RF, or in t d he inv tp e he lst an o ior r st sr a in t m ffs. ahe y ha ir ve 2065|2060|2055 prevalence of target date funds as the default investment (for example, see Plan Sponsor Council of America 2020). Percentage of 401(k) Plan Assets Invested in Target Date Funds (asset-weighted average) Percentage of 401(k) plan participants holding target date funds by participant age, www.ssa2018 .gov/be , wne ith lit fitP s/ tle e re r P ce v tir e ae r r nce ia m ta te g ion b nnt te a /pla g ae m y o o nne pfn a 4 g rtr0 ic 4 /a 1 ipa 0g (1 k) e( nt inc k) in a v r p g e e la e a st .se. n o N p rine ht s arim tn tici y lsp .- p seve a en cits fn p ie hd o e lr td a cie rn g nt ge o tof d ne a 40 tte a 1( r fu g kn e ) d tp d la ca a n tte e p g a fu o rn trid y cipa bynt s in their twenties Holden, Sarah, and Jack VanDerhei. 2001. “The Impact of Employer-Selected Investment Options on 401(k) Plan t ta he rg ire t 40 d1( atk e) fun plad n a s, ss com ets in parv ee dst w eit dh 48 p in equit erc ie es, sim nt of 40 ilar1( tk o ) 62 pla p n p ercaernt tic ipa amnt ong s w tit hose h mor not e thold han 10 ye ing taragre s t t d o a20 te fun yead rs of s. Am teong nur e, Neither EBRI nor EBRI-ERF lobbies or takes positions on specific policy proposals. EBRI invites comment on this b t w ee ent n a ieut s ha omd a tm icor ally e teha nrn olle 90 p d int ero cetnt he se of tfun heir d s a acc s d ount efas in ult vinv est ee st dm in t ena ts r, ge wtor dk ae te rs of fund as (F ll agigur es a er e 5 )us . A ing bou ta t rtg w eo t -d thir ate d s of funds to Figure 9, Target Date Funds Tend to Be Held by Expected Age Groups.................................................................... 13 57% Figure 9 14 Later Target Date (investor is old for the fund) year-end 2018 56% participant age, year-end 2018 It is pohold ssible ing tha ta t rw ge he t n da the te fun targ 55% de s he t dalte d sone we, re c om offe praerd e d in w 10 ith 93 p -year inte ercrv ent als of , p40 articip 1(k)a nts pla n ta falling rge bte d tw ateee 9 n fun tw do inv targ est et or ds in t ates heir 2070 2055|2050|2045 Participants’ Asset Allocations: Preliminary Fi 54% ndings.” Working paper prepared for the Center for Pension and a pnd artic 36 ipa pnt ers in t cent he of ir 40 si1( xtk ie ) s, t plahose n parhold ticipa ing nts w targ ite h mor t date e fun thad n 30 s had ye 51 ars pof erc job ent t e of nur the e ir ( see 401( Fikg )ur pe la n a A1)ss . e ts invested in r 4 he e 01 sea lp (k trhe )c h. pm la n ta save rg for et dra ette ir e fun medn tinv . Ie n a stor dds itin t ion, he the ir fif et vie ide s a nc nd e s show ixties t s ha had t t m aor rge e tt ha dan te 9fun 0 pd e rinv cent est of ors t the eir nd ac to count use s in thev se est fu ends d in 2063 Bonds Target Date Fu Targn etd Ds at: e Ev Fund ide s Ten ndc te o B Points t e Held by Exp o e cGr ted o Agwi e Gn rog up Popular s ity 2065 One Fund Above Percentage of Investors might hav fif et d iees or cide d si xt toie ps. rod uce an average that would land them closer to their target retirement year. Target date funds Retirement Research (CPRR) Current Pension Policy Issues Conference, at Miami University, Oxford, OH, June 8–9. Figure A1, Target Date Fund Use Is Higher Among More Recently Hired 401(k) Plan Participants .............................. 15 equities, compared with 53 percent among those not holding target date funds. a the s tse hey fun ardes. d esigned: as a single, complete portfolio op 48% tion. The majority of target date fund investors have most of Introduction 2060 Percentage of 4012 (0 k) 4 5i|n 2v 0e 4st 0|2 o 0r3 s 5in specified target date fund category EquitiesPercentage of Participants Participant Age Group a curre nd ntly Ap tend p to r bo e op ffer reiat d with e fivUs e-yee ar db atey ra 4 ng0 es 1 (2020, (k) 2025, Plan 2030, Part etc.). icipants 2054 Age Appropriate 2053 Suggested citation: Holden, Sarah, Jack VanDerhei, and Steven Bass, “401(k) Plan Participants’ Use of Target Date their assets in a single target date fund that is appropriate for their age. 2055 97.0% Target date, or lifecycle, funds are designed to offer investment diversification and automatic asset reallocation over 95.3% • 401(k) participants holding target date funds typically are invested in target date funds 41% 94.4% Holden, Sarah, Jack VanD 41% erhei, and Stev 9e 3.n B 8%ass. 2020. What Does Consistent Participation in 401(k) Plans Generate? Figure A2, Average Asset Allocation of 401(k) Plan Ac 9c 2ou .9% nts b 20 y3 Ta 5|2 9r 0 3g 3 .0 e 0% t |2 D 02 a5 te Fund Ownership and Participant Job Alignment of Year Investor Turns Age 65 With Target DatF e igure 4 15 One Fund Below 2050 Figure 3 Fu In nds s 1o ,”me EB c RI as e Iss s, ue the B ta rie rg f, et no. da t5 e37 fu, nd and disIcC los I R ure esea s ind rcic h aP te e rtha spet cthe tive s , tra vol. teg 27 y o , f no. the 7 fu (Se nd pis te to m b re eb r a2021 lance). the assets for investors Target Date Fund Year < 20 20s 30s 40s 50s 60s 70+ By Sarah Holden, ICI; Jack Va 2044 nDerhei, EBRI; and Steven Bass, ICI time. A target date fund typically rebalances away from growth toward an income-oriented portfolio as it approaches appropriate to their age. For exam 2043 pleP , a arm tiong cipa n 40 t A 1( gk e) G prla ou n p p articipants holding one target date fund, 91 36% Changes in 401(k) Plan Account Balances, 2010–2018.” ICI Research Perspective 26, no. 6, and EBRI Issue Brief, no. Tenure ................................................................................................ 36% ......................................................... 15 2045 Investor Is Old for thE ea F rlu ie nrd TaA rgv ee t D ra a O g te ne e ( i A n Avs ge e s s e tG otr r 34% o A is ul p y lo o Ac ub n a o gt v ie fo on r t h o ef f4 un 0d 1)(k) A P ge la An p p A ro cp c ro iau tents by Notes Target Date Fund Use Is Higher Among Younger 401(k) Plan Participants expecting to turn 65 around the target date. In other cases, the target date fund disclosure indicates that the fund is designed About the EBRI/ICI 401(k) Database Retirement* 0.02% 3.13% Figur 7e .7 A 8% 3 Target dat 9.84%e 12.53% 43.02% 23.68% and passes the Tta arrg ge ett D daatt ee Fo uf th nd e Y efun ar d, w < hic 20h is usu 20s ally include 30sd in the 40s fund’s na 50s me. These N 60s u m fun be drs c of70+ a n be organized as 2040 percent of those in their twenties held a target date fund appropriate 2 0t2 o 5|t2 he 02ir 0 |R ae gte ir, esi mm enila t*r to those in their 51 4 (October). Available at www.ici.org/pdf/per26-06.pdf and www.ebri.org/docs/default-source/ebri-issue- Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, 2034 One Age Group Below Targ Ine vt e s D to art Ie s F Yo uu n nd g Y fO oe rw a thn re -e e Fu r ns d n h d 2 ip 0 1 a8 nd Participant Age for investors retiring close to the target date. According to U.S. De2033 partment of Labor regulations Ta,r g ae ta t D rg ae te t d Fa ute nd fu s nd that is Across All Job Tenures, Each 401(k) Plan Target Date Fund Investor 2020 0.01% 0.71% 2.35% 3.75% 14.22% 77.05% 1.92% Percentage of Participants 2035 Retirement* 0.40% 0.57% 0.67% 0.84% 1.12% 13.44% 87.53% mutual funds, collective investment trusts, or separate accounts. First created in 1994, target date mutual funds have Figure A3 fif , tA iecsr. oss Nine All Jo perbc e Te ntnur of e those s, Ea cin t h 401( heir kt)w P ela ntn Ta ies he rgld et a Da fun te d Fu wnd ith Ia nv n eest aor rlie Te r tnds argetto dB ae te in One (making Tat rhe gem t D yaoung te for brief/ebri_ib_514_long-k-1oct20.pdf. 1 printThe , or d Eo Bw RI nloa /ICId p trhis oje r ce t p is o runi t solely for que beca p us eresona of itl s inc and lus non ion o com fm de ar tc aia pl use rovide , p dr ov byide a d w itd ha e tv a arll ha ietyr of d cp op laie n r s r ec eor tad in a kee ny pe a rs, nd 1 intended to serve as a qualified default investment alternative24% (QDIA) in a participant-directed retirement plan, such as a Pe 2r0 c3 e0 ntage of Investors 2025 * 0.51% 1.70% 3.07% 60.87% 33.38% 0.47% For more information on target date P e mutu rce Te n a n tla d fu gs 2 e nd t o o sf, B a se cco ee i n ICI’ u O ns tn b Targ e a T laa n er ce t g Re s, ettire D ya me eta ernt -F eu Dat nd n d 2 e 0 Fund 18 s Resource Center at 2020 0.07% 0.12% 0.24% 0.46% 3.58% 54.45% 7.83% e xperienced rapid growth in the past decade. These fund 1% s are predominantly held in retirement accounts, mostly in Fund ................................................................................................ 2024 1% ...................................................... 16 the fund), compared with 5 percent of those in their fifties. The remaining 2 perceO nt n e of those in their fifties Percentage of 401(k) PlanA ParT tici paA nts HoG ldinL g Ta ArgN et DC ateE Fun 2023 ds Retirement* 1% 1% all cop whic yright h pe a rm nd its ot the her a ana pply lic sias of ble not 401( ick e)s c pa ornt tic aipa inent d ta he ctriv eiin, a ty innd pla yns ou of ma vy a rcyit ing e or si ze q 3% uot s 2% — e sm froa m ll p 2% ve or ryt ions larg e of cor the p or reaptor ions t 2025 4% 2% 4% 401(k) plan, should meet the following require0% ments: 2030 * 0.50% 2.00% 9.43% 84.27% 3.57% 0.23% www.ici.org/trdf. For more info Perma rcen tion tago en ocfrite 40ria 1( k) re tire plame n pnt ar 1% tpila cin p a sp no ts ns ho ors ld s in hg o uld tar g co ens t did ae te r w fu he nd n sselecting target date funds, Figure 5 2025 0.04% 0.10% 0.22% 18% 01% .59% 26.02% 27.83% 5% 1.96% 5% 2% 3% 11% d He old fine en, d c Sa ont rarh, ibut Jaion (D ck VanD C) e prla hn a ei, c ac nd ount Ste s (whic ven Ba h in ss. c20 lude 21 . 40 “40 1(1( k)k p ) la Pns lan As ) but set A also llo thr caoug 3% tion, h A indiv ccount idua 2% B l r ala etnc ireem s, a ent nd acLcoa ount n s held a fund with a later target date (making them old for the fund). Overall, among 401(k) participants with 2020 16% provtide o sm d ta ha ll b t y us ou ine dss o e so ve s — rw bit ah tim a v aa nd riew tyit h p of inv rop ee st rm cit ea nttion. option Any s. us e beyond the scope of the Tw for o egoing requires EBRI’s 8% 2035 * 0.52% 2.54% 60.59% 34.98% 2014 1.26% 0.11% see U.S. Departme 401 nt (k o)f P La la bn or, T Emp arge loy t D eea Be b te y ne F pu a fits r n tid ci S e Ip n ca urity v ne t s jo t Ad b o rtminis s e n T ue re n tra ,d y tion e to a rC 2006 -e o nn dc 2 ae n 0 n d 1 t 8 r 2013. ate T heir Accounts in 3 Percentage2030 of 401(k)0 P .0 la 7n % AA ss lle 4 0 ts 0 .1 1 I6 n (k % v)e P stle ad n 0 i.n P 4 a 2 Ta r % tirc gie pta D 4 na .t0 s te 5% Fund5 s0 (.a 4s 5s % et-wei2 g.h 4t0 e% d 2013 1.09% Figure A4, 401(k) Participants Holding One Target Date Fund by Fund Date ............................................................ 17 ( AIcRA tivs) ity . in 201 A 29 s d CFR et8.” a ile §2550 Id C Ib Re e .404c losea w, -r e 5( cxh p e ) lor P (e 4) a rspe (tiion o ): ctiv f 401 e 27(, kno. ) pla 2, a n pnd artE icB ipa RInt Iss s’ ue us eB of rieft, ar no. get52 da 6 (Ma te funds rch)r. eA vv ea aila ls b tha le ta tt he vast 2015 50 45 40 35 30 25 20 15 10 5 0 5 10 15 20 25 30 35 40 target date funds, the vast majority (88 percent) held one age-appropriate target date fund. 8% prior express permission. averFor age p ) ermissions, please contact EBRI at permissions@ebri.org. Since 1996, the Employee 2040 Benefit Resea* rch Inst 0it .9 ut 1% e (EBRI1)0 a .7nd 6%the Inv 82e .5 st 1m %ent Com 4.5 p3a% ny Instit 1u .1 te 7% (ICI) ha0 v.e 1 2w % orked Target Date Fund Investments 2035 0.03% 0.13% 0.52% 28.42% 16.33% 0Th .55r% ee or M 0o .3 r7 e% 2010 2 m ww ajw or.ic ity i.or ofg 40 /pd 1f/ (kp )e p r27 lan p -02 a.p rtd icfipa and nt w taw rg w e.e t d ba ri.or te fun g/do d c inv s/d ee sfa tor ult s hold -sour one ce/e b tarri-gis esu t dea-tber ie fun f/e db , ra i_i nd b_5 ty14 pic_long ally, t-ha k-1oc t fun t20 d .p is df. See Investment Company Institute 2021a. Sources and Types of Data <----- Years to retirement -----> | <----- 2, 3 Years after retirement -----> 2004 (i) An investme 62% nt fund product or model portfolio that applies generally accepted investment theories, is diversified 2045Balanc0 e.d 0 1 F % unds 1.51% 64.22% GICs 31.6 1 a% nd 1.94% 0.64% 0.07% tog2e 0t0 he 5 r on collecting and analyzin 61% g annual data on millions of 401(k) plan participants’ accounts. This report analyzes Figure A5, 401(k) Target Date Fund Investors' Age Distribution by Fund Date .......................................................... 18 Percentage of 4 2040 01(k) pl0 a.n 12 p % artici0 p.a 41 n% ts hold 4.i2 n7 g % targ4e 8t. 6 d 2a % te fun 1d .3 s 4b %y par 0t.i5 ci 1p %ant a0 g .4 e4 ,% • Target date funds held in 401(k) plans tend to be held by appropriately aged 401(k) plan a ppropriate for their age. Report availability: This report is available on the internet at www.ebri.org and at www.ici.org 3 A 67% ge Equity Target Date Non Target Date Bond Money Other Stable Company Memo: 2000 so as to minimize the risk of large losses and that is designed to provide varying deg 56% rees o 0% f long-term appreciation 2050 0.02% 8 56% .37% 86.12% 2.98% 1.77% 0.68% 0.07% At year-end 2020, target date mutual fund assets were $1.6 trillion. DC plans held 67 percent of all target date mutual fund 401(k) plan participants use of target date funds using year-end 2018 data from the EBRI/ICI 401(k) database. 2045 0.19% 0.y 7e 2% ar-en 2d 8 .2 59 0 % 18 15.54% 0.37% 0.23% 0.21% Investment Company Institute. Quarterly Supplementary Data. Washington, DC: Investment Company Institute. participants. For example, 83 percent of 401(k) plan participants holding 2040 target date funds had ages in Several EB 9RI 7.5 a %nd ICI mem2bers provided records on activ52% e participants in 401(k) pla 2 ns for which they kept 4 20 77% 29 96.1% 30 39 40 49 50 59 60 69 70 79 Group Funds Funds Balanced Funds Funds Funds Value Funds Stock Other Unknown Equities and capital preserv 51% ation through a mix of equity and fixed income exposures based on the participant’s age, Source: Tabulat2055 ions from EB0 R 9.4 I0 /. I6 C 3% % I Particip6 a3 n.t6 -D 0% irected R3 e2 ti.re 64 m % ent Plan D 1.a 8t7 a 50% % Collection 1 .Pro 32% ject 0.47% 0.05% assets, IRAs held 18 percent, and other investors held the remaining 15 percent. See 9 4Inve .4%stment Company Institute 2021b. 2050 0.88% 6.72% 49.61% 0.87% 0.38% 0.27% 0.25% 92.5% 91.8% This EBRI Issue Br0 ie tfo e 2xa ye m aine rs 91% s indiv >2 toidua 5 84% l 401( >5 tk o) 1 p 0lan p >a 1r 0t ic toipa 20nts’ >e 2xpo 0 to su 30re t> o 30 a nd yeaus rse of taA rg llet date funds, using the line with reaching age 65 around 2040, while 96 percent of 401(k) plan target date fund investors in the 2035 records for year-end 20 94% 10 through year93% -end 2018. These 83% plan recordkeepers include mutual fund companies, 96% 93% 20s 26.2% 50.5% 3.2% 9.9% 0.6% 891 .1 .4 % % 86% 1.6% 4.4% 2.3% 74.3% 20s 30s 96% 40s 50s93% 60s 70s For all of tar the ge figur t ree tis in t reme his nt d reate por (s t, c u om ch as pone no ntrs m mal a y r enot tire a m de dnt ag to the e unde tot 96% als rp th ree sent pla en) o d berc l aius fee e of xpe round ctanc ing. y. Such products 2060 3.11% 89.71% 3.25% 1.91% 1.44% 0.53% 0.05% years years years years 96% Investment Company Institute. 2021 2055a. 20 221 .31 % Invest 48m .7e 5n % t Com 14p .9a 4ny % Fac0 t .B 36 ook: A Re % 0.23 v% 96% iew of 0.Tr 18e % nds 0.19% 4 93% EBRI/ICI 401(k) plan participant data collection project, which is the most comprehensive source of 401(k) plan 401(k) Plan Participants’ Use of Target Date Funds For 30s addfun itiona ds w l d 3e 3 eta .r8ei% l, as peper op H 40 or .ld 6 ia % e te n, ly V a ag nD ed e. rh 4 .e 3i, %and Bass 5 .2021. 3% 1 .0% 2.4% 3.2% 8.5% 0.9% 75.0% banks, insurance companies, and c 41% onsulting firms. Although the EBRI/ICI 401(k) project has c 88% ollected data from Number of 3.7% 5.4% 5.5% 4.7% Since 1996 and , tp he ortfo Em lip os loy cha ee 2065 ng Be e ne the fit ir Re 2 a8s.s sea 1e 0t % a rc llh I ocP ans tions a5rt 2 tit i.c 2 ut i6 p a % e a nd n (E t a B A sRI g so e)c 8 a ia a .t 2nd te Y 8% e da tris he r-E k n I le nv dv 5 2018 e e .9 st ls 8 m % ov ee nt r time Com 43 .3 .w 7 p % 4a ith % nythe Ins otb it 1je u .4 tce 7tiv % (I eC o If ) b ha ec 0 vo .e 1 ming 7% more 80% 2.4% 2060 82.59% 41.94% 0.50% 0.23% 0.17% 0.14% 0.12% 4 Participant job tenure (years) 40s 42.1% 28.4% 3.8% 6.2% 1.1 7.% 6% 3.8% 1.5% 4.8% 8.2% 1.0% 71.2% 1.5% 7 participant-level data available to d1 a.t1 e% . Using the EBRI/ICI 401(k) database, this resea 1.r3 c% T h p arg ae pteD r a atss e e Fss une ds: s On a19 ve96 rag te hr , oug 401( h 2018 k) pla 0n p , .5t% he ar tuni icipa vent rse s aof red offe ata rp erd ov m ide orr es v tha arn ie20 s fr inv ome y stem are nt to op yea tion r. Isn P a e ad r nd c d eit nt ha ioan, v ge et t he of he p op lans por us tuni ing tya of K 5 ey Findings: and Activcio tie ns s in t ervativ hee I ( nv i.ee.st , d m ee crnt ea C sing om p ris ak ny o f Indust lossesr)y w . W ith ainc shingt reason, ing D ag Ce: . IFor nvep st urp me on ste s C om of this pany pa Ira ns gtra itut ph e( . eA )( v4) aila (i), b le as a ste t c olla Youb ng ore ar te inv d e on stocrs olle tec nd ting to a ha nd v ea na higly h zin hug ma annu n caa pl ita da l ( ta w ith on re mtill urn ions s in of the 40 fo 1(rm k) p ola f sn p taba le rt e icxp ipa ec nt te s’ d a w ca cg ount es os. T ver his the r c eo pur orste of 50s 41.0% 23.7% 2065 1 43 .8 .3 % 0% 0.8 3.8 2% % 2.0 8.% 02% 6 0..5 0% 1% 0.0 51 .2 % % 07 .0 .0 1% % 10 .0 .0 % 1% 62.5% 401(k) Account Balance detep rm 13% arini ticng ulatrhe pr ov apide prop r c ra ian c te ha ass ng ete a ov lloc er a ttion g ime. iv Re en th corde s w ir peerresona encr l r yp istk e d p rte o fe cronc enceeas a l th nd e ide invnt est iting y O n of etie m m ep hor loye izon. rs and These Note2 : 0 Fu snds include3 m 0s utual funds, b 4a 0nsk colle 28% ctive tru 50 ss ts, and life in6 s0 us rance separaA tel laccounts. The tenure *Retiremal en lo t c fuati nds o n de includc ei s tairg ons etd f ao ter f u snuc dsh pr that h oa duc ve pts a assend p d theo ir r ta tfol rgeti o da st a esr e in no 201t r 8 (2 equ 000i,r 2 e0 d t 05o , 2 tak 010,e o i r nto 2015 ac ), in c o ad unt r ditioni s tok the the a wna wir w ly60s c .ic ze are ifa s 401 ecr) tb a ook.or (nd k)3 5 p low .la 7g % n p . fina ar nc t2 ic ia 2ipa .l 9c % nt aps us ital (einc of lud 5 ta .0 ing r% ge 401( t datke) 1 fun p 0la .6n % dsa s us s 3e .ing 0 t% s).y If eahu r-1 e ma 0nd .1n % 20 ca18 pita d l a a3 tnd a .9 % fr fin om anc t7he ia .8l % c Ea BpRI ita 1 /I l .1 C to % Ig 40 ethe 1(5 r k2 )a . re 3% Invested in 27% • How many 401(k) plan participants are offered target date funds in their 401(k) plan’s investment lineup. • Target date funds have grown in popularity. At year-end 2018, more than half (56 percent) of 401(k) variable is generally years working at current employer (based 24% on the individual’s date of hire) and thus may op re tions tie rem m p e oft loy nt e in e n in co es, b mc elude fut un d w t ie n acl rre g u d e ce tod dd ie a nd t te h s efun o tatrg ha des. tt db A aot tte y h coul fu enadr - se ud nd it e 67% b . e 20 t18 rac , kne eda ov rlye e r ight mult in 10 401 iple years. For (k) pla ens ac h p cova errting icipa ne nt a, rly da e ta ight inc in 10 lude 68% 23% All 39.0% 26.6% 4.6% 8.1% 2.4% 6.3% 4 Ta .5r % get Da 7t .e 6% Funds 1.0% 63.1% tolerances, investments or oPe the 71% rc r pr ene ta fg er ee o nc f e Ts a o rg fe an t Dia nd tei v Fiu dual nd A par sse ti ts cipant. An example of such a fund or considered to make up a complete portfolio, the human capital of younger investors would make their overall portfolio more d atabase. 74% Two Participant Age Group • How 401( 14% k) participants’ use of target date funds in their 401(k) portfolios varies by age. 79% overstate years of participation in the 401(k) plan. Note: Thp isa ir lltuic sipa tratint ons in t assuhe me sE tB hRI at 4 /I 0C 1I (k) 40 pl1( ank p)a rt dia citp aab na tsse are he inld ve s ta terd g e int th dea ttaerg (eor t d a lif tee c fuy nc dle w)i th fun the d s. Ta target r dg ae tet cl do aste es fun t to td h ea yss eae r tts w hat ere I 40 nv 1( ed st k21% a )m tp ee la nt of n p C bir om ar th, tic pa ipa frny om nt I s ns win t hic tituhe h a te . E n 20 Ba Rg 21 Ie /I bg C . rI“ oup The 401( isUS k ) a ss dRe a igne ta tir be a dm se ; e dn offe att e Ma rof erd k hir e ta te , r, g Fie fr rtst om d a Qua tw e hic fun rte h a rd s in t 20 te 21 nur he ” (eir June rinv ange )e. st A is m v a e aila nt ssb igne lin le eaups d t ; (Figure portfolio 88% may be a “life-cycle” or 9% “targeted-retirement-date” fund or account. [emphasis added] heavily weighted toward fixed-income type investments (their future earning 4% s); therefore, directing a high percentage of their 2% 7% Perce 4% ntage of Ta4% rget Date Fund Assets 3% 11% • How asset allocation behavior of participants investing in target date funds compares with participants not they turn 65. Individual investors may have 4 0 a1 d (k if)f eP re la nn t t a P rg ae rt t ire citp ire am nte sn H t a og ld ei n ing m T in ad rg , o er t m Da ay t e b e F s ue ne d ki sn g more focus on growth (choosing a 8% more tha So 7% 2% u n o rcene : Ta -q bu ua latrit oe n2% r s ( fro 27 m p EB erR cIe /Int CI ) 2% Pa of rtici 40 pa 1( ntk -D ) ire pla ct 2% n a ed R ss ete ire ts in t ment he Pla n d a Dt aa ta b a Cse. olle ct ion Project Three or More 3% 1% 2). M out ore st taha nding n ha loa lf (56 n b p ae larnc ce 2% e nt ; )fun of d 40 s in t 1(k) he p la pa n p rtic aipa rticnt ipa ’s inv nts he estld me ta nt rg p eor t d ta folios te fun ; a dnd s (som assee t a va ctlue ives a ly c tthose ribute the d tm o ta hose nd some www.ici.org/research/stats/retirement. Participant Age Group >90 Percent 3% 2% financial capital to equities is a complementary diversification strategy. As those investors age and their human capital Note: Funds include mutual funds, bank collective trusts, and life insurance separate accounts. later target date than their age suggests) or more focus on income (choosing an earlier target date than their age suggests). See U.S. inv Dep ea st rtme ing nt in t oa f rL gaebto d r,a Emp te fun loy de se . Benefits Security Administration 2007. <20 20s 30s 40s 50s 60s 70+ Retirement* 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 werefun aut ds. A oman a tica clly cou ent nr olle bala dnc ). e Ta for rg eeta d ca h p te afun rticd ipa ass nte is ts w the e rsu e m mor of e tthe ha n o parne tic-ipa qua ntr’ts a er ss (27 et s in a percell funds. P nt) of all 401 lan b (ka )la pnc lan es Table of Contents decreases reSo lativ urce e to : T athe bulir atifina ons nc froia ml EB caR pit I/Ia Cl, I Pa the rtiy ci p ma any t-D P w a ire r atnt ict ce i p to da R n inv ett iA re eg s m e t e mo G ntr Pl o re u a p n in Dfixe ata C d- oinc llect oime > o2 n0 Pro s P ee c je ruriti c ctene t s to to 9 0k P ee ep rc t ehe ntir overall 2, 3 • Whether participants Bhold alaning ced tF au rg ne dt s date funds appear to b Ge I C us s ing an the d m as their primary, complete investment • Target date funds offer professional management of a diversified portfolio that rebalances over Target Date Fund Year Participant Age Group Ja 16 gannathan, Ravi, and Narayana< R. 20Kocherlak 20s ota. 1996. “ 30s Why Should 40s Older Peop50s le Invest Le60s ss in Stocks Tha 70+ n A t year-end 2018, among 401(k) plan participants holding one target date fund, 91 percent of those in their twenties a ss Se ea tes. r e U .c Sonst . Soc ria uc l tS ee dc urity as the Ad su mim nis of traa tion ll p a 2021. rticipa For nt b ind ala ivnc idua es in t ls bohe rn in pla1960 n. or later, the full retirement age for Social Security Target Date of the Fund portfolio allocation stable. Some individuals may want to employ the opposite strategy. For example, stockbrokers, whose Introduction ................................ Target Date Fund Ye................................ ar < 20 20s ................................ 30s 40s ................................ 50s >0 to 20 60s Percent 70+ .......................... 5 Age Equity Target Date Non Target Date Bond Money Other Stable Company Memo: ti choic me. e .The EBRI/ICI 401(k) database has information on 401(k) plan participants’ holdings of target date Retirement* * 0.11% 0.98% 2.79% 9.73% 57.79% 28.60% 22% he Young ld an era P ge eop -ap lep?r”op Fe rid ae te ra one l Re— ser tha vet B isa a nk 20 of 55 Minne , 2060 ap , olis or 20 Qua 65 rtta er 20% rg lye tRe da vie tew ( Fi 20 gur , neo. 8 )3. ( Sim Sum ila m rly er,) 9 : 3 11 p– e23. rce nt Av of aila those ble a tin claiming is 67 years old. 2 2 4 income tends to be correlated with stock ma 20% rket returns, may want to invest more of their financial assets in fixed-income Retirement* 0.34% 0.23% 0.26% 0.38% 0.89% 13.75% 78.09% PerceG ntra og ue pof TaFunds rget Dat2 e0 Funds Fu s nd AsseB tsa 3l0 asnced Funds40 Funds s Funds 50s Value Fu 17% nd6 s0s Stock OA th ller Unknown Equities • Whether 401(k) plan participants are holding the target date funds appropriate to their ages. Target Dfun ated Fu s, w nds he ................................ ther st 2020 ructured as mut *................................ ual funds, 0.03%colle Fig ctu iv 0 re e .3 1 A inv ................................ % 2estme1 n.t3 3 tr% usts, or 1 4sep ................................. 91% arate a8 c0 c.ount 74%s. Tar................. g2 e.t 6 7 d% ate 5 w ww In .m vinn ese tmen apolis t Op fed.or tio gn /rse s15% earch/quarterly-review/why-should-older-people-invest-less-in-stocks-than-younger-people. their fifties held a target date fund appropriate to their a F gie g— urte ha 2t is a 2025, 2030, or 2035 target date. Nearly 10 Percentage of Target Date Fund Assets investments when they are young and transition to equities as they age. For an explanation of how the rebalancing away from 17 20s 9.3% 85.0% 2020 01 .5 .7 % 3% 0.1 0.8 0% % 0.0 2.% 17% 0 0..5 4% 3% 4.7 17 .6 % % 551 .8 .5 7% % 1 04 .3 .0 % 3% 86.6% Because appropriately aged investors in a 2065 target date fund would be young with low job tenure, they are likely to 9% Participant Age Group 12% 12% funds offerA av c eom ra 2025 g pe le tA es ps or et tf A olio llo *for ca tinv ion e 0 st .o 03 or f % 4 s0 . 1 A( k ta)r P g 0.e l2a t5 n % d a A te c c fun ou 1 d.n 4hold 0 ts % bsy a T d a 6iv r 5g .e 7r e 5 si t % fied Dat p eo 3 F r1tu .folio o 9n 4d % f both st 0.62o % cks and 10% 8% percent of those in the Rir o tle w e ont f T iea s he rge ld t D a a ta te rg F eu t n da dts e ifun n 4 d0 w 1(it kh ) a Pn laen as rlie Hra ts a rIg ne ctr e da ats ee (d m O ak ving er T the im m e young for the fund), 5% 30s 16.1% 73.3% 0.9% 2.0% 0.4% 1.1% 3.6% 2.3% 0.4% 84.3% s 40 to1( ckk s) to Pw laa n P rd a fixe rticd 3% ipa -inc nt os’ me Use 1% inv e of stme Tarnt ge st oD va er tea n Fu ind nds iv i................................ dual’s life cycle mirrors 1% ................................ the lifecycle pattern of ................................ the present value of .. 6 3% 2025 1.99% 2%0.11% 2% 0.18% 0.1% 64% 29.65% 24.57% 3.47% 2% 5% 5% 18 have relatively few assets invested in the 5% ir 401(k) plan. Thus, a relatively sma 8.ll3 % number of older investors who chose a target In the EBRI/ICI 401(k) database, investment options are grouped into eight broad categories. Equity funds Kephart, Jason, and Mega 2030 n Pacholok. O 20 w *21 ne . r “s 20 h 02 i.p 0 1 Ta 3 a % nr d g e Pta 1% D r0 t a.it 5 c e 2 i p % St arn att e J 3% go y 7b .L 4 a T 7ndsc % enua rp ee 8: 6 .Ris 62% ing Mar5 k.e 0t2 s % Make Up 0. 3 fo 3r % bonds and also rebalances to become less focused on growth and more focused on income as the fund 5.6% 6% 6.1% 2% 40s 23.7% 60.1% 1.4% 3.2% 0.7% 2.0% 5% 5.4% 3 4% .0% 0.5% 76.7% compared with 5 2 p0 es rceT nt a rof gett 3 hose 0 ds ate in t fun he ds' 4 ir0 m fif s a tie rke s. The t sh 5a 0 r r se em ; p ae ini rce ng 6 n0 2 ta s p ge er c oe f nt 40 of A 1l(lk) those ma rin t 4 ke .3t % he , yir e a fif r-te ien sd held a fund with a 4.3% 4% 8% future wage income, see Jagannatha 2030 n and Koc 1.97he %rlako0ta .1 7 199 % 6. 0.49% 5.23% 48.74% 3.59% 2.05% 1.9% 2.9% 19% 2.6% date fund with a later target date could have a disproportionat 1.9% e impact on the asset-weighted calculation presented in the 1 401(k) Plan Target Date Fu 2035 nd Investors ................................ * 0.04% 1.0................................ 2% 60.85% 36................................ .11 9.% 3% 1.73% .................. 0.17% 9 Fizzlin c50s onsi g Con st of tribut p N 2 oole 5 oions .te 1:% d Fu inv a nnd dse 5 ist n P 4cl .us m 4 u% e d h e n T t m s p aurtg ure a im lt fu a D n r 1 a d ily .t9 se 1 % , .inv b 4 A a % ss ne k e st co ts t eld le4 o ct in st .3 ia v% e n tru oc All s1 k - ts .T s 1 ,, im % ainc ne 2 d. luding l1 H if% eigh.” in3 s.u 7 ra e % Mor q nuit cenin s ye m p gast u ra 5ta .ua t9 e r% a Ma l fun cco na ud n 3g ts, b .s 2 e.% r Re ank se 0c a .5 olle r% chc (tMa ive 6 r3 tc.rh) 3 us % . ts, approaches a 0nd .6%passes t 0.he 9% target date. later target date (making them oldP for erce the nt a fun ged ) o.f account balances, year-end 2018 2035 Participa 0n .1 t 2A % ge Gro 0u .1 p1% 0.66% 32.22% 13.05% 0.74% 0.78% 40 1(k) plan target date fund investors’ selection of one target date fund varies a bit by participant job tenure, likely Target Date Funds 14% 6 low er panel of Figure 9. 60s 21.7% 56.1% 2.0% 5.5% 1.5% 5.7% 4.3% 2.6% 0.6% 51.3% See Investment SoComp urce:2 Ta 0 any 0 b6 2040 ulIns atiotit nsute from 2021b EBR* I/ Ia Cnd I Pa Mo rti0 ci .rning 1 p5 a% nt-D sta irer ctd ea d 8 ta .R 6 e 8 at% na irem lye ze nd t 8 Pl 3 in a .1 nKe 0 D % a ptha a C rt o la lend 6 ct.i2 o P 8 n% a Pro cho jelok ct; s2021 1 e.e 6 2 H% o . ld en, 0.17% life insurance separate accounts, and other pooled investments. Similarly, bond funds are any pooled account C hicago: Morningstar, Inc. 8% C onclusion ................................ 0 to 2 years >2 to 5................................ >5 to 10 >10 to 2................................ 0 >20 to 30 >30 years ................................ All ...........................14 2040 0.24% 0.59% 7.11% 47.18% 1.70% 0.65% 0.60% reflecting changes in 401(k) plan design over time. The offering and use of target date funds in 401(k) plans have All V 2a 2n .5 D% erhei, a5 n9 d. 2 Ba %ss 2021 1.6% 4.0% 1.0% 3.3% 5.0% 2.9% 0.5% 66.255% % Target date funds offe 2r 0 1 d8 iversification across stock and fixed-income investment 2, s a 3 t every point in time, in addition to • Younger 401(k 2045 ) participants * are m 0o .4 r1 e lik % ely to 61.4 h 4% old tar 3g 4et d .41%ate fun 2.d 66 s% than ol 0d .9er 7%particip 0.a 11 n% ts. At 18 primarily invested in bonds. Balanced funds are pooled accounts invest G eId C s in b a ot nd h stocks and bonds. They are I 7t is possible that some 401(yke)a p rslan tary ge ea tr s date fun yed a rinv s estorys ha earsve selected their target date funds based on a This system of classification does not consider the number or types of distinct investment options presented to a given See BrightScope and Investment Company Institute 2021. In plan year 2018, large 401(k) plans offered an a 12verage of 28 Note: Funds include mutua 2045 l funds, b0 a.n3 k 6co %llectiv1 e. 0 tru 2% sts, an 3d 6 .l2 if2 e% insura 1n 2ce .33 s% eparate 0 .a 4cco 3%unts. 0 F.i2 g6 u% re repo0 rt.s2 t3 h% e expanded, both as plan sponsors have increasingly offered target date funds in their investment lineups and as Mor A repbpanin ela ndix nc gst ing ................................ ar. ov 20 e18 r tim . Mor e. W nin he gn th star e ................................ L ifeti fund m is e A mlloc any a ty io en I ars fr nde ................................ om xe st he (June targ ). eC t hic dataeg, o: the ................................ Mor por nin tfolio gsta is r, highly Inc. A vca on ............................. ilacbele nt a ra t ted in 14 Payre tia cri- pa end nt 2018 E, qu 62 2050 it yp eTa 79% rce rge nt tof da40 te *1( Nk on ) p Ta la 3.n p r 8ge 8% a t rD tic atipa e 8nt B 6.on 9 s in t 3d % M he on ire ty 4 w .5 e O 3 nt t% he ies he r Stald bl 3.e t1a -7r% C ge om t d pa atny e1 .fun 32% ds, comp 0.a 1r7 e% d with Participant Job Tenur 78% e (years) classified into two subcategories: target date funds and non-target date balanced funds. A target date fund d ifferent anticipated retirement age, rather than the assumed retirement age of 65. For example, the full retirement participant b co ut n ce ran the tratr iothe n of ty 40p 1e (k) s o pf lao np ations ccoun c ts ho insve en ste bd y in p a ta rt rg ic eip t d aants te f.u n Pd re sli amina mong ry 4 0 re 1s (k) ea prc lah n p aa na rtilci yp zing ants 1. ho 4 ldmil ingli to an rge pta rticipants investment options and an average 2050 of 21 inv 1.e 6s9tme % nt o 9p .7tions 1% w4 he 5.n 11a % targe1 t .0 d2 a% te fund 0. 4 s2 uite % is c0 o.un 29% ted as 0a .3 s 9ing % le investment 13 86% 81% 2 2 automatic enrollment has spread, often using target date funds as the default investment. 401(k) plan participants equities J, ob re Te achin nurg e for gFunds row 2055 th (FiFunds gur0 e. 0 1) 1% . As t Bahe la5 nc 1fun .e 4d 3d % Fu ap nd pr soa 3 Funds 9 c.he 74% s aFunds nd pa 3ss .7V e 9% a s lit ue s t Fu arnd g 3e .s 4 t 7d % aS te toc , itks 1 p.or 3O 5t% tfolio r her Ue nk ba 0 no .la 2w 1 nc % nes to https://indexes.morningstar.com/resources/PDF/Brochures%20and%20Fact%20Sheets/Morningstar_Lifetime_Allocation 50 p Ne or te c:e Fnt 87% un d of s itnhose clude in t muthe ualir fu si nd xt s,ie bs. Sim ank colila lect rily ve, tru 51 s ts p,e arn cd e nt life of ins40 ura1( nce k) s p ep la an a ratess acco ets of untsp . T ahre tic teipa nure nt v s in t ariablhe e ir twenties date funds. 88% typically rebalances its portfolio to b 401(k) P elc aom n Pe a rle tic ss ip foc antus s N eo dt o Hn g oldirn ow g T th a argnd et D m aor te e F u foc ndus s ed on income as it approaches a dra gew fo n rfro Soc m ia the l Se 2000 curitEB y c Rla I/im ICI ing 401( fork )indiv d 87% ataidua base ls sa ug ge gd e s58 ts tha or t old the e rs in 201 heer nu 8 mb waesr a og f e inv 67 es, tme so som nt op etions targ e pt re d sa etnte e fun d dd o e inv s no est t ors References ................................ 98% ................................ 91% ................................ 83% ...........................................................19 o ption. 2055 4.26% 64.69% 9.37% 0.36% 0.21% 0.16% 0.24% 97% 92% 96% 91% w ith sh0 or to te 2r y te ea nur rs es w3 ill2 .ha 1% ve ent 4e 0.r9 e% d their 4012 (k .9 )% plans at 1a 0 .t 0im %e 1 w .6 he %n both ta 2.0 87% r% get date 0 fun .6% d offe 8r.ing 9% and 1.a 0ut %omatic is generally years working at current employer (based on the individual’s date of hire) and thus may overstate years 2060 0.43% 62% 71.93% 8.30% 7.58% 8.10% 3.31% 0.36% b _Sum e mor me a rfoc y.pus dfe . d on fixed-income investments. Ultimately, target date fund investors typica 91% lly are transitioned to a More thaw n o erne e inv -qua est rteedr in t of ta he rg e atss de atts in t e funhe d 16s, c EBom RI/I pa CrIe 40 d w 1(itkh ) 23 da tp ae br acse ent w a em reong inv etst hose ed in t in tahe rgir e tsi dxattie es. fun ds at year-end and paSo sse us t rcehe : Ta t ba ur la gte iotn d s a fro te m o EB f th RIe /I Cfun I Pad rt, ici w phic anth is usu -Directed a Rlly eti re inc mlude ent Pld a n in t Dahe ta C fun olled ct’s na ion Pro 94% mje e. ctN ; son ee- H ta or ld ge ent, date balanced m influe ay b nc e et a pragrticip eting ants the . On yeaa rv tehra ey g er,e p aa crt h 67. icipants Som hav ee t a 10. rg4 etd d isa tinc te t fun opd tions inve b st ut, or s m on a avye ra hagvee, c eho arlie osr e a ont nly ic ipa 2.5 te (H do rld et eir n ea m nd ent 57% 2060 75.59% 23.20% 0.40% 0.21% 0.14% 0.11% 0.11% 56% >2 to o 5f y pe aa rtr ici s patio3 n5 i.n 6 % the 4013 (k) 6.p 4l% an. 4.5% 9.3% 2.4% 2.0% 0.9% 7.8% 1.0% 8 2, 3 e Nnr otollm es ................................ ent are more common ................................ than when longer-te................................ nured participants ent................................ ered their plans. At ye................................ ar-end 2018, 98 perce ..nt 20 The tenure variable is ge2065 nerally years 4. 7w 7% orking a 1t7 c .6 urre 1%nt em2 p2 loy .29 e% r (base1 d7 o .0 n 0% the indiv 2id 0.u 57 a% l’s date 1o 5f .8 hire 7%) and thu 1.8 s7 ma % y retirement V inc anom Derh e efun i, andd w Ba he ssn th B 2a 02 la e 1n tca erd g e Ftu da ndt se fund reaches its final a GIss Cset a alloc ndation. The main economic reasoning 2018 , reflecting a 59 percent average allocation among the 56 percent of 401(k) plan participants in t 72% he database 78% VanD fun erhe ds inc i 2001b lude ). a In ssa ed t da iti lloc ona , tthe ion o pre r li hy mina brid ryfun ana dly s, in sis fo ad un dit dion to life that 401(st k)y p lea rticip funda s. nts Com arep a no ny t na stoc ivek — is th eq auit t isy, in t whe he n g 40 ive 1( n kn ) ages ba >se 5 td o on 10 yte he arir s em 3p 6.loy 1%ers’ nor 34.m 3% al retireme4 nt .3 % age or allow 8.1% ed re 2.t2 ir% ement a 3g .5 e% based on 2.t1he %ir oc8c.upa 4% tion 0 .( 9e % .g., law 2065 11.70% 0.07% 0.02% 0.01% 0.01% 0.01% 0.01% 22% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project P of la40 n Sp A 1( gk onsor e) plan ta CE ounc qru gie ty il of t dT aa tA e rm g fu ee tnd rD icaainv t. e20 e Nst 20 on or . T s w 63 arg rit d eh two tA D nnu ate a or l Sur B o fe nw d ve er M y y o of e na eP rys of rofit Ot h tSha e enur r S rting e a b hle e ald nd Cone o40 m1( p taa k n r)y g P ela t d ns a: teRe fun flect d, ing com20 p M a19 e re m d P o la w : n ith overs •ta *te ROv eyte irera a em rse o ll nf t, p f4 u a0 n rticip d 1 s(k ina ) p ctlu ion d lan e in ta t rthe ga er t g d 401( et d ate fk ua ) n te fu d ps la tn. ha n t d ha in ve v pes ass to ed r s th h eia r d ta sl rgeig t d h atl tey s h inig 20 h 1er 8 (2 a 0ll 0o 0,c 2 a0 ti 0o 5,n 2s 0 to 10, equ or 20it 15 ies ), in behind this path of rebalancing is that younger investors have the implicit value of many years of wages ahead of them, holding target date funds (Figure 4). The average asset allocation to target date funds varied with participant age, with >10 to 20 years 41.2% 24.1% 4.6% 7.5% 2.4% 6.2% 4.9% 8.3% 1.0% options pla,n’ the s sponsor y do not (d the ivid e em the ploy ir a esrs )e . ts Mone amoyng fun alld s c n. In onsi dest ed of , letsho s tha se n fun 1 d ps d erce esi nt go ne f p da trticip o ma aint ntsa in a follo w steadb a le 1/ sh na a re ss p er t ic ae llo . cation enforcement, fire fighters, government workers). It also is possible that some target date fund investors chose a target *Retirement funds include target date funds that have passed their target dates in 2018 (2000, 2005, 2010, 2 2 4 addition to the retirement income fund included in the target date fund suite. Exper G ie ro nc up e. Chic Funds ago: Plan Sp Funds onsor B Caounc lancil of ed Fu An m de sric Funds a. Funds Value Fun5 ds Stock Other Unknown Equities 89 percec nt o m of p40 ar1( ed k) w pit lah n ta 40 rg 1e (k t d ) p atlea fun n par d inv ticeip sta or ns w ts n ith mor ot hoe ld tiha ngn 30 ye target d ars of ate fu tenur nd es ( . see 401( Fi kg ) ur pla e n p A3)a. rL tic ong ipae nt r-s t10 eoft nur en ed which ma >20k e tos st 30 o yc ek a rin s ve 4st 3.i0ng % the 1c7om .6% plement to 4t .9 ha %t fixed-inc 7.7om % e 2 a.t8 tr % ibute. 7.4% 7.3% 8.4% 0.9% 9 younger 401(k) plan participants having a higher share of their 401(k) plan assets allocated to target date funds. strategy. BrightS oc r o 2p 0e 1 5a ),nd in a Inv ddie tis otme n to nt theComp retirem ae ny nt iIns ncotit mute e fu n2021 d inclu re de pd o rts in t ha en taa rg ve etra dg ate e o fuf n28 d su in ite v.e stment options in 2018 and an For St ad ad biti leo v na alue l de p ta riod l, suc eet s, suc Figure h 20 as g in ua Ho ra ldnt en, ee V da inv nDe erhe stmi, ea nt nd c o Ba ntsrsa c 2021. ts (GI Cs) and other stable value funds, are date fund with an earlier or later date to achieve a different asset allocation—more conservative or more aggressive, 20s 50.8% 0.0% 7.1% 22.9% 1.1% 2.6% 1.5% 8.7% 5.1% 56.4% Figur (e *) s = less than 0.005 percent 27% >30 years 38.7% 15.7% 5.3% 9.0% 3.5% 11.1% 7.3% 8.5% 0.9% 401(k) pla ten ta nd tro ge inv t d ea st te in fun eq duit inv iee s t sthr oroug s arh e e slq ight uityly fun mor dse or lik t ehe ly te o qhold uity ptor wo tion o targe f tt a dra gte et fd unds, ate fun pedrs ha , an ps dr e aflect lso ting hroug the h 22% average of 21 in15% vestment options when a target date fund suite is counted as a single investment option. 10% Note: 401(k) plan participants invested in the target date fund with the target date closest to the year that they respe re cp tiv oretly ed — a tha s one n th 4% c ea a te gg eor -ay p. pTh rop er ia otthe e fun r ca dt ew gould ory is ha the ve rpersi ov dide ual for d. A nd, othe arc tinv ivee 40 stm 1( ek nt ) s, su plan p ch a arts r icipa eal nt es in t statehe fun ir d las. te 30s 55.8% 0.0% 8.5% 9.4% 1.7% 3.9% 2.8% 16.2% 1.6% 63.5% 10 U.S. Department of Labor, Employee Benefits Security Administrat 19% ion. 2006. “Fact Sheet: Default Investment All 0.4% 0.3% 7% 0.0% 14 0.1% 0.0% 0.1% 0.0% 0.1% 0.0% 401(k) plan participants’ asset allocations also vary with participant job te5% nure, reflecting how plan design has changed over Target N do att ee : 4 fun 01(d ks c ) pla an n p ha artv ic ei pa a n v10% ta sr iie nvte ys tof edle ing ta hl st e ta rruc gettur da ets, inc e fun9% dluding with th e a s m targut et ua datl funds e close sor t t oc olle the c yt eia vre t h inv at e th st ey m te unt rn 6 tr 5us artes. At 40 mor 1(ek-)lim pla c itom e n p d pa aarrny rta icy ipa st of ont ctk a s ra oft gnd ete n y the e ta e rnd e s qor uit to igin yinv pa or e lly st tion o offe in erf q euit non d.ie -s t Only tarhr g5% e oug 2 p t dh e a etre c q e buit nt ala y of nc fun 40 ed d 1( s or fun k) d ptsla he . n ta A e t q yr uit egae y rt- e p dnd or atteion o 20 fun 18d f ta , ov inv re g ere st atll, 401 or da s w te it f(unds, k h two ) 7% 4% Figure 1, Target2% Date Funds Are Diversified and 1% Rebalance as the Fund Approaches and Passes the Target Date ......... 6 4% turn8% 65 are co1% nsidered in their age-appropriate target date fund (blue shading). Individual investors may have 40s 58.6% 0.0% 1% 6.0% 8.9% 2.5% 5.3% 4.2% 12.9% 1.4% 66.3% The final category, unknown, consists of funds that could not be identified. sixties or older likely are targeting a later retirement date, as they are still working. 2% 2% 1% Alternac 1tiv one ss Und idered e in r tP ha er irt ic ag ipa e-a nt pp -rD oir pre ia cttee d ta rIgndivi et dad te ua ful Ac nd (c bount lue sh P ad la in ns g).” . I nA dv iv a id ila u1% a b l le in va ets tw orw s w m.a dyol h.g avov e a /a dg ife fenc ren ie t s/ tae rgb esa t /about- 11 the past 20 years. Recently hired participants have a higher share of their assets allocated to target date funds than year-end 2020, 57 percent of target date fund assets were mutual funds, and 43 percent were collective investment Percenta ag d eis ff e are ren d t to alrg lar e-tw re eitg ire ht m ed en a t v ae gre a g in e s m . ind, or may be seeking more focus on growth (choosing a later target or an d fe a w ls eo r p y thr la ea n ta oug rs of rh com ge te t nur da pta e e ny he fun st lddoc tinv w ko a etnd st aror gte he s ha t dea d qt uit e 66 fun y ppe d or rs, c cte ion o nt om of p f non a the red ir- tw 40 ait rg 1( h 8 ek t )d p p a ela tre cn a ebnt ass l a of e nc t40 s inv ed1( fu k ends. ) s tp ela d n ta in e Ovrq e guit reatll, ie ds, c a 40 te1( om fun k)p d p a la rinv en ta de w strit or gh es t Retirement* 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 50s 53.2% 0.0% 7.0% 11.1% 4.1% 8.6% 4.6% 10.0% 1.3% 61.9% 5% <20 20s 30s 40s 50s 60s 70+ retirement age in mind, or may be seeking more focus on growth (choosing a later target date than their age suggests, Target 2date funds are designed to be a complete asset allocation solution and the vast majority of 401(k) plan target ebsa/our 6 -activit die ats/ e r theasour n thec ir ea-g ce e nt sue gr g/f es atc st) -o sh r m ee ore ts /de focufa s ult on - in in co vm est e m (ch eon ots-ia nlt ge arnna eatrl iv ie er st- aunde rget dr a-tp e a thra tic n ipa theint r a- gd eir ected-individual- participants with longer tenures. Figure A2 in the appendix presents the variation in average asset allocation of 401(k) plan Figure 2, Role of Target Date Funds in 401(k) Plans Has Increased Over Time ........................................................... 6 t rusts 60s . N ot all pa 4r5 ti.c 3i% pants ar 0 e . 0 o % ffered this inv7 e.s 1t% ment optio 1n 4..2% 4.0% 13.1% 3.6% 11.3% 1.4% 53.0% w da itth mor e fund 60 e inv t ha pe en 30 ye rst ce or nt s ha for ad r s of 40 slight 1(tke)ly nur p la highe en p . arr taic lloc ipaant tions s not to hold equit ing ies c tarom getp d aa re te d fun with 401( ds. The k )y p oung lan p ea str t40 icipa 1(k nt ) s not plan ta hold rge ing t da ta te rg et For additional information, see Holden, VanDerhei, and Bass 2021. Although some investors may have legitimate reasons to invest in multiple target date funds or to invest in funds with a making them old for the fund) or more focus on T in a cro gm ee t D (c ah te oo o sfi ntg h e a n F u ea nrd lier target date than their age suggests, making Participant Age Group suggests). date fund investors hold one target date fund. At year-end 2018, 94 percent of 401(k) plan participants owning target a ac cc co ount un Alt l-apsla sens ts. b 5 y 2 p .4 a% rticipant 0. 0j% ob tenure. 7.0% 11.5% 3.6% 8.7% 4.1% 11.4% 1.5% 60.4% 3 date fun G d fun IC s.s d Ov a rinv e e r ge a ust ll, 401 aror ans ha tee(d k d )in p t vhe e la sn ta t m highe en rtg c est o t n d ta ra a lloc tce t sa fun . tion to e d invest quit ors ha ies cd om 66 p a pre erd c ew nt it h th of the eirir c ount 401(e kr )p p ala rtn a s not sse hold ts ining vest ta er dg in et date them young forP tlh ae n s fu O nd ff)e .ring Target Participants Offered Participants Holding Target Date Fund later or earlier target date than the one nearest their 65th birthday, it is clear that the vast majority of 401(k) target 1 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project d Fia gtur e e fun Pe 3, rce dTa s, he ntarg gee ld st aD one re a t de ot la lFu arr-w g nd eeti g Use dha te te d I a s H fun vera ighe dg ( eFi sr .g A ur m eong 6). Ther Young e e wra 40 s lit 1( tle k) vPala ria n P tion b articy ipa pa nt rtsic ................................ ipant age. Ninety-seve ................... n percent of 7 Having generally selected or been defaulted into one target date fund and chosen to remain in that fund, 401(k) plan Date Funds Target Date Funds Target Date Funds Assets 11 *Re eq tire uit mie es, c ntfun fuom nd dss. Old p ia nr cle ud de ew r t a it 40 rg h 60 p e 1( t d ka )t ep e fla r uc n n p e dnt s a t hfor rattic h ipa 40 ave1( nt pk a s ha ) s sp ela d d n p th si em ia r ila tratrg ic r e ipa a t lloc dnt atea s not st ions in 2 0hold 1t8 o (2 eing q 00 uit 0t , ie a 2r 0 s w g 0e 5,t he 2d 0a t 1he t 0e , o rfun r t2 he 0d 1y s 5 ), w ( Fi ie ng rae ur d d te a it ir o 4) g ne .t t oA d th ta eyt re e ea tfun ir re -e md n e d n t Appendi Sourcx e: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project At year-end 2018, 57 percent of non-target date balanced fund assets were assumed to be invested in equities (see date fun No dt einv : Fu est ndor s s a inclr ue d e us ming utua the l fuse ndsfun , bad ns a k cs t olle he cty iv ew te rurset sd , e lisi feg ine nsu dr: an acs a e s e si pngle arate p aor ccto folio unts,op antd ion for any po tohe led ir i n avg ee s tm cohor ent t. 2 U.S. Depar N tm otee:nt 40 1 of (k) Lp alb an or p, aE rtim cip paloy ntse ie nv e Bsete ne d fit in s Se the tac rg ur eit t dya tA ed fu m nd ini wsitth r a thte ion. targ20 et d07 ate . cl “D os ee fa stult to tI hnv e ye ea st r m tha etnt th eA y lttue rn rna 65t iv are es Und er 401(kN ) op t la alln p part air citp ic aipa ntsnt are s in t offere he d ir th itsw in evnt esie tm s hold ent oping tion.target date funds held one, compared with 93 percent of 401(k) plan inco tam rg ee ft u n dda itne cl fun uded d iinv n the est taor rge s t t de and te futn o dhold suite .an age-appropriate target date fund—that is, the target date for the fund 2018, a pm ro inv ong due cst t 40 por rim 1( s or ak ri)l y not p ila nvn ta .e s ter dg ie nt t h de a t se e cfun uritd y iinv ndie ca st te or d.s, 59 p The ten eu rrcee nt var iof ablt ehe isir g e 40 ne1( rak lly ) p ye la an a rs w ss ore ktis w ng ae t rceu rinv rene t st em ed pl o in t yera rget date Inve stment Company Institute, Quarterly Supplementary Data). The allocation to equities in target date funds varies with the 3 considered in their age-appropriate target date fund. Individual investors may have a different target retirement age in Ov Thie s a rall, a ppem ndix ongp r 40 ov1( idk e)s a pa drd tic itiipa ona nt l d s w etit ah ta il on rg 40 et1( dk a)t e p la fun n d ps, ar t88 icipa pent rcs’ ent us he e of ld tone arg eatg d ea -a te p p fun rop drsi. atFi eg tur are gs A et d 1 t athr e oug fund h A . 3 Figure 4, Average Asset Allocation of 401(k) Plan Accounts by Target Date Fund Ownership and Participant Age ......... 8 GICs are guaranteed investment contracts. P articipant Directed Individual Account Plans.” Fe 15deral Register 72, no. 205 (October 24): 60451–60480. Available at Note: Funds include mutual funds, bank collective trusts, and life insurance separate accounts. target date fund investors in their fifties or sixties. This slight variation by age might reflect variation due to job tenure. coincides with the year the participant turns 65. For example, 401(k) participants in their twenties at year-end 2018 Note: 401(k) plan participants invested in the target date fund with the target date closest to the year that they turn 65 are considered in their age- (based on the individual’s date of hire) and thus may overstate years of participation in the 401(k) plan. funds, 2 4 3 p me in rc de , o nt r m in e ay bq euit sey e ki funds, ng more 5 p focu ersc e ont n g ro in c wth om (ch poa ony sin st g a oc lak te , r a ta nd rge1 p t dae ter c the ant n t hin t eir he age e sq uuit gge ys p tsor ) otr ion o moref non focus -otn a rget date funds’ target dates. For target date funds, investors were assumed to be in a fund whose target date was nearest to their EBRI Issue Brief is registered in the U.S. Patent and Trademark Office. ISSN: 0887 –137X/90 0887 –137X/90 $ .50+.50 explore how 401(k) plan participants’ use of target date funds varies by participant job tenure. Figures A4 and A5 Equities include equity funds, company stock, and the equity portion of balanced funds. www.federalregister.gov/documents/2007/10/24/07-5147/default-investment-alternatives-under-participant-directed- appropriate target dateSo fuu nrce d. In : T da ivb id uu la atli o in nv se s fro tom rs EB ma R yI /h IC av I e Pa art d ici iffp ea re nn t-D t ta ire rgct ee t re d R tire etm ire em nte a ng t e Pl ia nn m D in ad ta , o Cr om lle act y ib oe n s Pro eeki jen ct g more focus on growth Younger 401(k) plan participants are more likely to have been recently hired and thus more likely to have had target Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project will t •ur n 65 b Yo inu co n e m t g w eer e (ch e4 n 2054 o0 os 1i(k ng ) p a n a n elan d arl 20 ie ta r 63 tar rg g ( e et Fi t d ga d ur te ae te th 7 an )fu . thIn e f se id r ain g le ev c st es u ing gto gea s r s tt s a ). h r Se g oe le d t a F dia g h u te re ig tA o h 4er c inoinc tc ho e ide n ap cpen ew nit d tra ih x ft o ti ur r o anin n dd o itg if o n 65 th al , eir a dt ehe tailn th .c cois u n gts roup in © 2021, Employee Benefit Research Institute –Education and Research Fund. All rights reserved. 65th b Jus ala t nc a bs irthd e40 d fun 1( ayk.d ) Th s p . la e A n ta m eq ong uity rg e 40 p t od 1( rti ak toe )n p fun w la an p s d e inv s atima re tic stipa or ted s t nt us s not end ing t the o hold b e ind ing hold usttry a ing r g ae v tte a ra d rg ag e te e t d e fun q auity te d s, fun p52 ed rc s a p ee nt p ra p ce g rop e nt fo rof ia r tthe tehe t o ir a st40 s he ig1( ir ne k a d )g ta e ps la r, gn a e at si d ss m ae te ila ts r FigurN e o5, te: 40 Fun 1( ds k ) in P clla udn Ta e murtg ua elt f uD na dt se , bFu annd k coI llnv ecte ivst e or trus Te sts, lind fe intsou ra Conc nce e snt epr aa ra te te Their accou nA tsc, c aoun nd atns y in Ta pooled rg inevte s D tm atee n tFund produ ct (ch poro ov siide ng a a la dte dr ittiona argetl d dae tet a thil on an the 4i01 r ag(e k ) s u pgla gn p estsa , r m tic aki ipa ngnt ths’ emta orld g e fotr d tha et e fu nfun d) od r m us oe re b foycu psa o rt nic in ipa com nte a (ch ge o oa sn in dg tahe n e fun arlied r ’ts arg ta ertg de at te d th aa te n . individual-account-plans. date funds included in their 401(k) plans’ investment lineup when they enrolled (Figure 2), or to have been would be considered to have selected an appropriate target date fund if they held a 2055, 2060, or 2065 fund. target date funds than older 401(k) plan target date fund investors. At year-end 2018, 88 percent of primariSo ly iu nrce ves : tT ea db iu nl a thtie o n ss e cu fro rim ty EBR indica I/ItC eId Pa . rticipant-Directed Retirement Plan Data Collection Project fu p wa e nd trte e c rinv a n e lce ula m ste te erd g d e in e us s ing for quit the tayr g fun Mo et d rning ds a, te 4 sfun p ta er rd c L e ife ant ss time e in c ts he All om o ld p ca ab tion ny y 40 stInd o 1( ck k e) , xe a ps nd la (n ta s4 p ee rMo e grect rning e d nt a tin t e sta fun he r 2018) d e inv quit .e y st or por s. tion o The f non vast m -ta ajror geitty d of ate ta rget their age sugIg nv ese tsst , m ma eki nt ns g ................................ them young for the fund). Se ................................ e Figure A5 in the append................................ ix for additional detail. ............................................. 9 automatically enrolled. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project 401(k) plan participants in their twenties holding target date funds held more than 90 percent of their accounts Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project d b a ala tenc fun edd fun assdest.s he ld by 401(k) target date fund investors are invested in age-appropriate target date funds (Figure 8). e e e e e e e e e e e e e e e e e e e eb b b b b b b b b b b b b b b b b b b br r r r r r r r r r r r r r r r r r r ri. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.o o o o o o o o o o o o o o o o o o o or r r r r r r r r r r r r r r r r r r rg g g g g g g g g g g g g g g g g g g g IIIIIIIIIIIIIIIIIIIIs s s s s s s s s s s s s s s s s s s ss s s s s s s s s s s s s s s s s s s su u u u u u u u u u u u u u u u u u u ue e e e e e e e e e e e e e e e e e e e B B B B B B B B B B B B B B B B B B B Br r r r r r r r r r r r r r r r r r r rief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief A re • • • • • • • • • • • • • • • • • • • • s e S S S S S S S S S S S S S S S S S S S Sa e e e e e e e e e e e e e e e e e e e erp p p p p p p p p p p p p p p p p p p p ctttttttttttttttttttth e e e e e e e e e e e e e e e e e e e e mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe repor r r r r r r r r r r r r r r r r r r rr t9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 f,,,,,,,,,,,,,,,,,,,,r o 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2m 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 t1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 h e • • • • • • • • • • • • • • • • • • • • E N N N N N N N N N N N N N N N N N N N NB o o o o o o o o o o o o o o o o o o o oR .................... 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 I 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 E7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 d ucation a nd Research Fund © 2021 Employee Benefit Research Instit ute 15 17 16 12 14 13 18 19 10 11 21 20 7 4 6 9 3 5 2 8