For example, in one study participants chose between two Life-Cycle Funds
(funds that gradually shift their balance from stocks to bonds), where one fund was riskier than the other, and each fund was described in basic or more complex terms.
Worden, 1999, Investors' Asset Allocations Versus Life-Cycle Funds
, Financial Analysts Journal, 55(5): 37-43.
One reason for these funds' popularity is that in 2007 the Department of Labor passed a regulation that led many employers to use life-cycle funds
as the defaults in 401(k) plans.
There are also short essays commenting on the challenges of life-cycle funds
in the context of the financial crisis.
The product can also be applied to life-cycle funds
or to asset-allocation programs.
Though many analysts argue that traditional 401(k) plans, as invested by employees, will not meet retirement goals, there are two types of preset asset-allocation investments that may offer a possible solution: target retirement and life-cycle funds
Under the terms of the agreement, Mercer's outsourcing business will be able to provide new and existing DC clients fully integrated access to IncomeFlex Target, which resides within target-date or life-cycle funds
, or in asset-allocation programs, adding a guaranteed lifetime income component to these increasingly popular in-plan investment options.
AARP Financial's life-cycle funds
: In 2006, AARP Financial successfully launched a set of three life-cycle funds
to simplify investing for its customers, many of whom found themselves overwhelmed by the thousands of mutual fund options available in the marketplace.
Under the terms of the agreement, Hewitt will provide multi-channel, fully integrated access to IFX Target, a leading in-plan retirement solution that delivers guaranteed lifetime income, downside income protection, and growth potential for individuals with assets in target-date or life-cycle funds
Among new features in CIGNASelect: Access to a broad range of investment options -- from fixed income to life-cycle funds
to a self-directed brokerage account investing in more than 4,500 mutual funds, stocks and bonds.
Prudential Retirement today debuted a new retirement-plan solution specifically designed to deliver guaranteed lifetime income, downside income protection, and growth potential for individuals with assets in target-date or life-cycle funds
, or in asset-allocation programs.
Consider a focus on investing and asset mix -- similar to 401(k) life-cycle funds
where an individual with 40 years until retirement, as an example, automatically invests 35% of savings in bonds and 65% in stocks.