Are you one of the millions of Americans unknowingly putting your retirement at risk with target date funds? In this episode of The Tom Dupree Show, financial advisors Tom Dupree Jr. and Mike Johnson expose the hidden dangers lurking in your 401K plan and reveal why your 401K planning strategy needs immediate attention.

If you’re approaching retirement or have already retired, this episode could help save your financial future. Tom breaks down recent Vanguard data showing that over 80% of 401 (k) participants are using target-date funds – and why this trend should concern every serious retirement saver.

Target-date funds have become the default choice for millions of workers, but as Tom explains, “The market is your advisor” when you choose these seemingly safe investments. This autopilot approach to retirement savings removes all customization and personal attention from your financial strategy.

Tom and Mike reveal several critical issues with target-date funds that could derail your retirement:

“Target date funds are not about you, the investor. They’re about the plan sponsor covering their, you know what? That’s what they’re about.” – Tom Dupree Jr.

The episode delves into how target-date funds performed during 2022’s market turmoil. For investors with 2023 target dates, the supposedly conservative 70% bond allocation got “smacked” when interest rates rose dramatically.

“This was supposed to be conservative, right? But the target date fund has no concept of what’s going on.” – Tom Dupree Jr.

One of the most overlooked aspects of 401K planning involves abandoned 401K accounts from previous employers. Tom and Mike discuss how job-hopping, while often beneficial for salary increases, can leave valuable retirement funds stranded.

“Probably over half of the business that we get… we’re not taking business away from other broker dealers as much as we are taking business from existing retirement plans where the person probably doesn’t even have an advisor.” – Tom Dupree Jr.

For those aged 59½ and older, Tom reveals a powerful strategy: the 401K rollover through in-service distributions. This approach allows you to:

At Dupree Financial Group, the philosophy differs dramatically from target date fund assumptions. Instead of planning to liquidate principal in retirement, Tom advocates for:

“We believe that you have to have a robust but nimble investment plan that goes on after you retire… you’re not really gonna tweak or change that much. You’re probably just gonna set it up to where it pays out a distribution.” – Tom Dupree Jr.

The episode explores concerning volatility trends affecting retirement planning:

Don’t let your retirement savings operate on autopilot. Whether you have an abandoned 401K from a previous employer or want to explore 401K rollover options, professional guidance can make the difference between financial security and uncertainty in retirement.

Ready to take control of your retirement planning?

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The Tom Dupree Show is brought to you by Dupree Financial Group, where we make your money work for you. Tom Dupree Jr. founded Dupree Financial Group on the principle that creating long-term relationships with people, not just their money, is the key to successful wealth management.

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