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Your Retirement: On Target

Fairytale gone wrong

Once upon a time, about 15 years ago, a fierce dragon was terrorizing a small village…

Image: fabi42′s Flickrstream, Creative Commons

Wait, sorry! Wrong story.

Back in the 1990s, a terrible retirement problem was looming. Traditional pension plans were disappearing, 401k plans were taking their place. But few people understood how they worked (or wanted to join them). So companies began enrolling employees into retirement plans automatically—which solved one problem and created a bigger one.

Where do you invest all that cash?

A happy-ish ending

Along came band of sorcerers—um, investment companies—who worked their magic and created… insert tingly music here… a self-contained retirement portfolio that, like a TV dinner, would provide all the financial basics in one package.

Target date funds were designed so that average investors could park their money for 10, 20 or even 30 years—depending on the target retirement date—and a team of professional managers would safeguard their money and help it grow.

And it’s not a fairytale. While still imperfect, target date funds are proving to be a long-term investment solution for millions of people who otherwise might be too intimidated to manage their own money.

Bottom line

No one can cast a spell to make your money grow, but there are ways to make managing your nest egg easier. Learn, explore, ask lots of questions. Your net worth starts here.

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Cross-posted with permission from DailyWorth

DailyWorth’s Editorial Director MP Dunleavey, known for her former “Cost of Living” column with the New York Times, is also the creator of the award-winning “Women in Red” personal finance series on MSN Money, which chronicles the money issues of real women around the country. An award-winning journalist and author of “Money Can Buy Happiness“, MP got her start in personal finance nearly 10 years ago. She is also a columnist for ParentingBody & Soul (a Martha Stewart publication), a regular contributor to SELF magazine. You’ve seen her, heard her or read her work in a variety of media outlets, including NPR’s Marketplace, WCBS-TV, SELF, Good Housekeeping, and countless others. magazine,


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