A recent study finds that employees who have used target date funds as part of their employee benefits retirement strategy feel better prepared about reaching their financial goals.
In a survey of workplace retirement plan participants by ING, 71 percent of those using target date funds felt that their investment choices were more sound. In addition, among those not currently using those financial products, two-thirds would like to reduce investment risks as they approached retirement.
"Like many of the latest 401(k) features, target date funds have evolved as a way to make saving for retirement easier and more automatic for the average plan investor," added Rick Mason, president of corporate markets for ING U.S. Retirement.
Participants also reported a greater level of knowledge regarding financial terms, as a full 29 percent of those who did not use target date funds said they weren't sure what diversification meant.
The use of target date funds has jumped in recent years. Data released last year from Morningstar and Financial Research Corporation found that the market spiked to $363 billion last year from just $15 billion in 2002.
