Are your target date funds really working for you—or just running on autopilot? On this episode of Broadcast Retirement Network, we sit down with MarketWatch financial journalist Alisa Wolfson to unpack the “set it and forget it” mindset that millions of investors rely on. Alisa explains why these popular funds only account for one thing—your expected retirement year—while overlooking crucial personal factors like your pension, Social Security timing, and individual risk tolerance. If you have a 401(k), this conversation will change the way you think about your retirement savings.
Jeffrey Snyder, Broadcast Retirement Network
We’re going to welcome back to the program this morning Alisa Wolfson. She’s a financial journalist with MarketWatch.
Alisa, always great to see you. Thanks for joining us this morning.
Alisa Wolfson, Marketwatch
Thanks so much for having me.
Jeffrey Snyder, Broadcast Retirement Network
And we know that you, I was going, I was kind of joking with you. I was looking at MuckRack and you had, you were so prolific this week, writing so much content. So we appreciate you just taking a few minutes.
Before we get into your article and your analysis of target date funds, let me ask you, you cover a lot of things. You’re one of the top contributing financial journalists at MarketWatch. What led you to cover target date funds in your article?
Alisa Wolfson, Marketwatch
So I think, you know, anyone who has a retirement plan at work, which is a lot of people, are automatically thrown into these target date funds. And so, you know, it’s a topic that really appeals to a lot of people. And I think most people tend to brush it aside and don’t necessarily look into it and just sort of trust the process.
And that’s where we sort of discovered like that can be detrimental and maybe you should have a little more awareness and a little more knowledge about these funds and what your money is doing as you approach retirement.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. It’s always better to be an educated investor, whether it’s do it for me or do it for yourself type of person. Target date funds, I think, really came on the scene back in 1998 when I was a young man in the retirement industry.
They become very prolific. You talk to a lot of experts. What did they tell you when you look under the hood?
Alisa Wolfson, Marketwatch
So essentially, I mean, they can be great vehicles, right? For someone who is hands off and, you know, just wants to sort of like streamline, right, their retirement. It can be helpful versus doing nothing at all.
Right. You’d rather be in a target date fund. But for someone looking for a more optimized, customized experience, you’re really going to want to get in there and understand the exact product that you’re in, because essentially what the target date fund does is groups you in to just your retirement year.
So it’s just that’s all it essentially knows about you. And that’s not much to know about someone. Right.
So, you know, when I retire versus when, you know, so if we are going to retire the same year, we also have a lot of important information, our Social Security timing, whether we have a pension, our risk tolerance, you know, things that would differentiate us aside from just the year that we’re retiring.
Jeffrey Snyder, Broadcast Retirement Network
You know, these products, you know, I remember when they came online and I always go back to Ron Popeo. I don’t know if you remember the infomercial where he would set it and forget it. It was like a some kind of rotisserie.
Yeah. And it’s kind of like the same kind of thing. That’s the way they’ve been sold, which I guess is OK from a marketing perspective.
But these products can change over time because, as you said, the the the allocations, the equity to fixed income allocations change as you presumably age, depending on your vintage. That’s what we call them in the industry.
Alisa Wolfson, Marketwatch
Right. Yeah. And also, you know, according to the glide path, which I mentioned in my story also.
And, you know, so that can vary in terms of how, you know, how aggressive you start out and how conservative you want to end up. And there’s also a misconception that, you know, these these plans, you know, sort of run through, you know, when you’re 60. But people now like longevity is just increasing continually.
So people have, you know, longer retirements. They need more money to withstand that duration of time. And that really, you know, determines how you should look at your target date fund and the way you want to approach how aggressive or conservative you are.
Jeffrey Snyder, Broadcast Retirement Network
You know, I was reading one of I read the full article, but I read one of the paragraphs. I think you had interviewed somebody.
Alisa Wolfson, Marketwatch
Yeah.
Jeffrey Snyder, Broadcast Retirement Network
And to your point, you know, I think the thinking used to be 60 40 split 60 percent equities, 40 percent fixed income and that fixed income number would go up. But I seem to recall in your article that someone even said maybe more than 90 percent equities, 10 percent fixed income because of the longevity component.
Alisa Wolfson, Marketwatch
Exactly. And, you know, coupled with inflation and sort of all of these external factors that, yeah, that might be now sort of an old school way of thinking and an old rule of thumb that might need some updating. And yeah, we, you know, put a chart also in the story that sort of shows with one hundred thousand dollars how it grows in a 60 40 split versus a 90 10 split.
And you can see for yourself there is quite a difference.
Jeffrey Snyder, Broadcast Retirement Network
Did you get a sense in talking to your contributors in the article? I forget what you call them, like not guests, but you experts. Thank you.
I’m so far from that. I don’t even don’t even know the term. But in all seriousness, I mean, these a lot of times the target date fund was selected maybe a decade ago, especially during the Pension Protection Act back in 2006, when which mandated the auto enrollment that you spoke about earlier.
Our plan sponsors are fiduciaries kind of taking a fresh look at these products to see, hey, maybe this isn’t the right product that’s appropriate for my employees.
Alisa Wolfson, Marketwatch
Well, that’s part of the set it and forget it mindset, right? Is like you enter this you’re kind of, you know, on think of it as like a freeway, you know, you merge in and you’re kind of in the carpool lane all the way over on one side just cruising. Right.
But there are exit points and, you know, different times or opportunities that you may want to reconsider, get off, get in a different lane. And absolutely, it’s worth looking at. But it does tend to fall on the shoulders of the investor.
So you might need to bring that up versus having someone proactively look at that on your behalf. Because they do tend to be those set it and forget it funds where, you know, it’s just assumed that it’ll run its course and do its thing. And at the end, you’ll have what you have.
Jeffrey Snyder, Broadcast Retirement Network
Did you in speaking to the experts, did you get a sense there are a lot of new products coming online? I think we last time you were on the program about a month, month and a half ago, we kind of talked about this just in general. But now there are targeted funds that have a retirement income component or an annuity component.
Did you get a sense from the experts how they felt maybe about some of these newer products and also the inclusion of other asset classes, depending on how the new Department of Labor Investment Selection Rule turns out?
Alisa Wolfson, Marketwatch
Definitely. Yeah. And again, it’s all, you know, really dependent on personalized, you know, personal specifics and what someone is looking for and what their risk tolerance looks like and how aggressive they want to be.
And for some people, absolutely, the introduction of, you know, new products like that makes sense. And for others who, you know, maybe tend to shy away from that, you know, added risk. It’s not the right answer.
So my, you know, it’s not to say that target date funds are, you know, horrible. I say that in the piece, like they can absolutely be a positive thing for many people. But I think having an awareness and knowing, you know, questions to ask or certain things to revisit can definitely make them more suitable for you.
And in talking to your financial planner as well, just sort of, you know, preparing you to understand exactly what you’re in.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. I mean, again, I go back to you can’t be an ostrich and stick your head in the ground. You have to be, you don’t have to be a financial expert.
I don’t think we in the retirement industry or we in journalism should expect that the people who are investing, they have day jobs, they have families, they shouldn’t be investors, but they should, someone should be looking out for them in the sense that. That’s what I’m trying to do. Yeah, it’s just, I know that I’m giving you kudos.
Alisa Wolfson, Marketwatch
Yeah. Thank you. No.
Yeah. And it’s just, you know, to sort of highlight and, you know, bring, like I said, awareness and even just like little morsels of education along the way to, you know, sort of open someone’s mind in terms of thinking like, oh, right. Maybe that is a good point.
I should look into that or I should question this or yeah, I should rethink, you know, like people in my family have living well into their nineties. I might really need to think about having a 30 plus year retirement or what have you. So yeah, just sort of, you know, changing the mindset and asking questions.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. Do not be passive. You take, take control.
Maybe that’s a little harsh, but take control of your own destiny. If you can, and this is stuff, you don’t have to be a rock in science. Look, if I can figure it out and other people like me can figure out.
Alisa Wolfson, Marketwatch
I’m in the same boat.
Jeffrey Snyder, Broadcast Retirement Network
That’s right. Alisa, before I let you go, as I said earlier, you have a lot that you cover. Can you give us a little bit of a teaser on what you might be covering this upcoming week that we might be able to find interesting in your column at MarketWatch?
Alisa Wolfson, Marketwatch
Ooh, well, you know, a large part of what I do is respond to reader inquiries. And so we have some really interesting ones coming up where people write in with their financial conundrums. And I talk to experts on their behalf and sort of try to help spell out a path, successful path for them.
So if you like reading about other people’s problems, you’ll want to be tuning in.
Jeffrey Snyder, Broadcast Retirement Network
So are you like Dear Abby? Is it Dear Alisa?
Alisa Wolfson, Marketwatch
Right? Yes. The financial version.
Jeffrey Snyder, Broadcast Retirement Network
Okay. So is the column named Dear Alisa?
Alisa Wolfson, Marketwatch
It’s called the advisor, but I might propose that now.
Jeffrey Snyder, Broadcast Retirement Network
I would talk to MarketWatch.
Alisa Wolfson, Marketwatch
Right. There you go.
Jeffrey Snyder, Broadcast Retirement Network
I would talk to MarketWatch and Dow Jones and say, look, I think.
Alisa Wolfson, Marketwatch
I think so. You’re on to something.
Jeffrey Snyder, Broadcast Retirement Network
I could see that. Alisa, we’re going to have to leave there. Thanks again for your expert analysis.
And also thanks for playing along with my stupid jokes. Always great to see you. Great to see you as always.
And we look forward to having you back on the program again very soon.
Alisa Wolfson, Marketwatch
Thank you so much.