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 Fugitive and 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 LifePath, 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.
The 20 th 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 recent Investor Pulse Survey. Here’s what topped the list:
- 36% would have started investing for retirement earlier
- 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 here.