True or False: Target-Date Funds Guarantee Retirement Success?

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Dennis,
I wouldn't be quite so harsh on employee education but I do agree that far too many employees are not prepared for retirement. This is why we started Retirement Fiduciary Advisors. We feel that direct, specific advice to plan participants on how to invest their retirement plan accounts as well as direct retirement planning advice are what is needed. To us this is the next logical step after education.

Roger Wohlner (the author) of IL 3:26PM November 10, 2011

So called ‘retirement education’ is a multi-Trillion dollar failure (the annual income shortfall of millions of baby boomers times 20 years or so of retirement).
With 401k ‘retirement plans,’ employees are responsible for defining their future income, funding it and having distributing it for as long as they live. Unfortunately, they don’t know how to do any of these things.
Due to retirement education’s failure, $260 a month is how much typical near-retirement employees can expect. So says professor Alicia Munnell, director of the Center for Retirement Research at Boston College. According to her, typical individuals approaching retirement had only $78,000 in their 401ks and IRAs. Using the four percent a year lifetime withdrawal rule that many financial planners follow, it comes out to $260 a month from the employees’ retirement accounts.
Maybe that’s why nearly 90% of 401k plan sponsors say most of their employees will not be financial prepared for retirement.
The current approach to retirement education is like putting inexperienced drivers in high-powered race cars and wondering why they crash. But rather than making sure the drivers have the needed skills, the ‘solution’ has been to add more investment horsepower and auto-cruise gadgets to 401k plans. Is that because the sophisticated mechanics who are in charge know how to improve the vehicles (401ks) – but not the education?
Until adult basic adult education principles, competency-based success measures and personally meaningful and realistic account targets become part of an adult-oriented retirement education program, retirement just ain’t going to work. (pun intended)
Before anyone rushs to defend it, keep in mind that there were no adult education experts or instructional design professionals involved in creating what is now called retirement education. It was built 30 years ago using old mutual fund sales presentations and materials. It continues today because ‘that’s the way it’s always been done’ and ‘it’s what all organizations are doing.’
The ‘retirement industry’ must either fix retirement education so employees learn how to use a 401k successfully…or give up on using ‘voluntary’ retirement plans.
Americans deserve to know how to achieve the retirement they want.
Dennis Ackley (dennisackley.com)

Dennis Ackley of MO 9:46PM November 09, 2011