More than half of the users of target-date funds (TDFs) in their defined contribution retirement plans are confident they will meet their retirement goals, an increase of 10 percent from five years ago, says Voya Investment Management in a survey released Tuesday.
Sixty-three percent of those using TDFs are sure they can meet their retirement goals, compared to 48 percent of those not using them, according to Voya’s Participant Preferences in "Target Date Funds: Fresh Insights." Voya surveyed 1,005 participants in employer sponsored defined contribution plans, about half of whom use TDFs and half who do not.
More than 75 percent of TDF users feel the funds alleviate the stress of retirement planning and increase their confidence in making good investment decisions. Two-thirds of respondents say they prefer TDFs that offer a mix of both active and passive managers for enhanced diversification.
Forty-two percent of respondents chose to invest in target dates because of their simplicity, while 32 percent say that performance is the primary criteria. TDF users contribute a median of 2 percent more to their accounts than non-users.
Diversification is important with 91 percent of users saying they prefer TDFs that incorporate a broad range of asset classes and 86 percent like TDFs managed by multiple investment advisors to take advantage of their specific expertise, according to the survey.