ACT Advisors today published a white paper for credit union executives outlining why the widely used target-date fund may be the wrong investment vehicle for most C-suite leaders with multiple sources of retirement income.
ASHEVILLE, N.C., April 21, 2022 /PRNewswire-PRWeb/ -- ACT Advisors, a firm specializing in comprehensive financial planning for credit union executives, today published the white paper, "Target-Date Funds—The Wrong Investment Vehicle for Many Credit Union Executives." The report explains that while widely used by 401(k) plan participants, target-date funds (TDFs) fail to recognize the critical timing of an investor's retirement date versus their consumption date related to retirement income. In addition, the paper provides data demonstrating how executives could be missing out on significant savings by following the traditional retirement solution offered in a TDF.
As the white paper outlines, a key factor is that most credit union executives have multiple sources of retirement income—from bonuses and accrued leave to a split-dollar or 457(b) plan—each with varying timings for distribution and taxation. The automatic-balancing feature of TDFs, which is adequate for most rank-and-file employees, often tapers risk too early for executives because it doesn't consider other investment vehicles available to them.
"We understand the appeal of TDFs as they relate to an employee who doesn't want to self-manage their portfolio or is only investing and relying on a single retirement source, such as their 401(k)," said Doug English, CFP®, ACT Advisors' founder. "However, in our experience credit union executives with a full suite of compensation benefits generally don't need to consume their 401(k) assets until well into their retirement or even until age 72, when they must begin required minimum distributions."
The data and case study outlined in the paper illustrate how TDFs are often allocating risk too conservatively for executives who have several years, or even a decade longer in some cases, to save into their retirement. "It's critical to understand how these different investment vehicles work together to strategically provide income over time to ensure credit union leaders optimize their unique benefits ," English explained. "It is why we emphasize the importance of personalized planning rather than traditional solutions that don't address the complexities of an executive's retirement options."
Download the white paper at http://www.act-advisors.com.
About ACT Advisors
ACT Advisors has over 20 years of experience providing investment management and financial planning services to credit union executives. With specialized knowledge of unique retirement plans, including 457(b) and the collateral assignment split-dollar, the team of advisors helps credit union executives mitigate risk, analyze investments, and chart a path toward financial success. Learn more at http://www.act-advisors.com.
Media Contact
Doug English, ACT Advisors, 1 (828) 398-2802, [email protected]
SOURCE ACT Advisors
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