In 1993, Harrison Ford was being chased all over Chicago by
Tommy Lee Jones, people were reading about the bridges of Madison
County, and the
very first phone-to-phone text message
was sent somewhere in Finland.
There are probably still fans of
The Bridges of Madison County
, but there were
6.1 trillion text messages sent in 2010
alone. Clearly, many things little noticed at the time go on to
have a major impact on our lives.
Which leads me to something else in 1993 that few people
noticed at the time; BlackRock introduced
, the very first
target date fund
. While not as ubiquitous as texting, today target date funds are
in up to 80% of defined contribution plans and hold up to $500
billion in assets.
anniversary of the target date fund strikes me as a good excuse
to think about how much can change over time, and what small
actions we can take that can have a big impact on our lives.
Assuming you are in mid-career or later, what practical actions
would you have taken if you had perfect hindsight?
Regrets- They've Had a Few
That's one of the questions BlackRock asked retirees in the
Investor Pulse Survey
. Here's what topped the list:
- 36% would have started investing for retirement
- 32% would have spent less money
- 21% would have worked longer
- 12% would have sought professional advice
Everyone today knows they need to save for retirement. Talk to
young workers for whom 1993 feels as distant as a nursery school
rhyme, and they accept paying into their 401(k) as a fact of
working life - and they are likely to be better for it. Regrets
are more likely to emerge among the generation that did not
recognize early enough the importance defined contribution would
have for their retirement.
Retirement as Part of Your 'Life's Path'
But maybe the most practical action to take is to take a cue
from the name of BlackRock's target date fund and recognize that
retirement is part of "Life's Path". People were told to save for
retirement, but the advice was in isolation. There was little
guidance that addressed financial wellness.
We need to help people ask meaningful questions that relate to
their whole financial self, like, for example, whether or not to
save more for retirement or pay their mortgage faster, or if a
Health Savings Account
can roll over to meet retirement expenses.
Sue Thompson, CIMA, Managing Director, is Head of the
Registered Investment Advisor Group, overseeing the firm's
iShares and 529 sales efforts with registered investment
advisors, family offices and asset managers. Sue is a regular
contributor to The Blog. You can find more of her posts