Welcome to the Broken Pie Chart Podcast Episode 15. In this episode Derek Moore discusses the often-misunderstood target date funds prevalent in many workers 401k accounts and whether they are a good or bad idea especially given their drawdowns during the 2008 financial crisis.

Key Takeaways:

• • What are target date funds?
• • How did target date funds do during the 2008 market?
• • What was performance so different between some target date funds during financial crisis?
• • What is the purpose of target date funds in retirement accounts?
• • How target date funds are really just age-based asset allocations adjusted as a person ages.
• • What are the drawbacks of target dated funds?
• • Why are target date funds so misunderstood?
• • How do target date funds compare with college saving accounts and 529 plans?
• • How target date funds do not take into account outside assets when making allocations
• • Understand why target date funds may not allow for more personalized advice
• • Did Congress really hold hearings about target date funds post the Great Recession?
• • What is the target date glide path and asset allocation adjustment schedule?
• • Target Date funds do not have embedded downside protection
• • What are alternatives to target date funds?
• • What was the target date surprise?

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Report From Committee on Aging Congressional on Target Date Funds

https://www.govinfo.gov/content/pkg/CPRT-111SPRT53067/html/CPRT-111SPRT53067.htm