|
"They (investment firms) also argue
that people generally aren't going immediately
from working full time to not working at all;
they're extending their working years," Carlson
says. "So they're not going immediately from a
big accumulation phase to a big distribution phase."
Right now it appears that many boomers approaching retirement age really don't have a choice. They'll have to extend their working years out another five or 10 years, either because they haven't saved enough, their investments have contracted sharply -- or both.
In fact, that's largely the perception
among employers who offer retirement plans (also
known as plan sponsors). In a recent survey of
1,089 plan sponsors, nearly half (46 percent)
say their plan participants are considering a
delayed retirement because of the recent economic
turmoil.
Just for the record, AllianceBernstein's
fund performance is not the worst of those sporting
a 2010 target date. That dubious honor goes to
Oppenheimer Transition 2010, which plummeted 42
percent in the 12 months ending Nov. 14, compared
to the 39 percent drop for the Standard & Poor's 500.
Ouch! Check out the performance of 21
target-date 2010 funds.
A little background
Beginning in 2008, target-date funds get safe harbor protection as qualified default investment alternatives, courtesy of the Pension Protection Act. That means that if you don't get involved in choosing investments yourself, employers who offer automatic enrollment can throw your retirement contributions into a target-date fund without fear of legal ramifications -- for the most part.
Roughly 30 percent of employers
provide auto-enrollment, according to plansponsor.com.
The breakdown of default investments used by companies
with auto enrollment is as follows.
 |
| Default investments in 2008 |
|
|
|
|
By far, target-date funds are the
most common default option, and they've grown
in popularity in recent years. "It's worth noting
that in last year's survey, target dates were
the default in 33 percent of plans," says plansponsor.com's
Adams.
|
