Target-date fund investors remain significantly more confident about investing and meeting their retirement goals than non-target-date fund investors, according to a survey by ING U.S. Investment Management.
The survey also found that individuals who invest in target-date funds are more comfortable with the tasks associated with retirement plan investing than those who do not invest in target-date funds.
Sixty-seven percent of TDF investors said they are comfortable deciding how much to invest in their DC plan, compared to 52 percent of non-TDF investors. Sixty-six percent of TDF investors also said it was easy to get enough information about their investment options to make informed decisions, compared to 49 percent of non-TDF investors.
Fifty-seven percent of TDF investors said they have the time that is required to keep an eye on their investments and to make changes as market conditions arise, compared to just 40 percent of non-TDF investors.
More than half of TDF investors surveyed said they are confident they will reach their retirement goals and 64 percent of those said they have plans to turn their defined contribution savings into an income stream once they retire. This compares to 41 percent of non-TDF investors who are confident they will reach their retirement goals and 43 percent who plan to turn their retirement assets into an income stream when they retire.
People who invest in target-date funds also are more likely to contribute more toward their retirement, the survey found. But despite the rise in equity markets since the last survey in 2011, participants still prefer wealth preservation over growth, especially when they are at or near retirement.
Target-date fund investors expect broad diversification in their target-date funds, with that preference extending to multiple investment managers.
Those who invest in target-date funds do so for the ease of use and built-in diversification that adjusts over time. Those who don’t invest in a target-date fund might consider it if they had more communication about the benefits they provide, the survey found.
ING U.S. Investment Management conducted its survey in September 2013 of defined contribution plan participants to gauge their views about target-date funds. The goal was to help employers do a better job of selecting target-date funds that meet the needs of their employees.