Most American investors mistakenly believe that target-date funds provide guaranteed income in retirement, among other misconceptions of how the instruments work, the SEC found in a recent investor survey.
Fewer than 30% of all survey respondents were able to identify the correct meaning of the year in a target-date fund’s name (answer: the approximate year an investor expects to leave the work force). Also just 30% of respondents knew that the funds do not provide guaranteed income in retirement, according to results of an online survey of 1,000 Americans, conducted in October 2011. The New York-based research firm Siegel & Gale conducted the survey for the SEC.
