Reply to Only 100k in 401k at 50

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[quote=Anonymous]A large part of 401K underperformance which is shocking as up to recently the default was the in cash or money market safe option. The company did not want to do the investing for you. Many people often opened a 401k and did not move the funds so say in cash for many years.

Now companies can default to a target date. My own daughter started work in 2022 and did not pick any choice for her 401K under new rules she got put into Target Date 2065. When she finally realized this in Summer 2024 she was mad she missed the rally in stocks, but turns out her 401K was up a lot. If it was the past it would have been in the money market or something. She reallocated.

But before companies could invest in stocks with default option was a big problem. People would leave it.

Also Target dates and an aging population means a ton of 55-70 year olds still in workforce. Those Target dates have a lot of bonds and international stocks.

Also different target dates have different stock tollerances. The Fidelity 2025 has more US stock than the Vanguard 2025

And age matters. I was at a start up prior to this and a lot of Target date people. We were a very young company. It was all Vanguard 2060-2070 funds. Lets day that was a old Fed place the funds would be Vanguard 2020-2045 funds. Big difference last five years in missing out on Stock Market gains.

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