An updated joint study conducted by the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI) states that younger participants continue to invest in target-date funds (TDFs). According to the original study, in 2019, participants in their twenties allocated 54.1% of their assets to TDFs compared to an allocation of just 28.8% by plan participant in their 60s. It is also worthy of note that in this same data pool, 31.3% of 401(k) assets were invested in TDFs, up from 26.6% in 2018.
Target date funds are designed to offer a diversified portfolio that focuses on growth for younger participants and automatically rebalances to focus more on fixed-income investments for workers as they approach and enter retirement.
The study also reveals that average 401(k) account balances increase with participant age and tenure. In addition, a minority of 401k participants had loans outstanding.