Even without the market shocks of that period, according to Beth McHugh, Fidelity’s vice president for market insights, many retirement savings accounts were becoming more diversified and less risky than they once were.
“I think there is a good message with folks realizing that they need to have a more balanced approach,” she said. Investor education may have helped, but probably broad changes in the retirement savings plan landscape made the biggest difference.
Those changes include more employers automatically enrolling new workers in the company retirement savings plan unless they opt out and, unless the participants make a choice themselves, putting them into a default fund such as a target date fund. Target date funds generally reduce investments in the stock market as an investor ages, reducing the amount of risk in the fund.
In other words, risk is best as a younger person’s game.
Martha M. Hamilton writes a regular column for Bulletin Today on retirement and financial issues.