Today, BlackRock launched what it says is the industry’s only suite of target date ETFs, “providing millions of Americans with a simple, affordable, and tax-efficient way to save and invest for retirement,” according to a press release announcing the news.
With 57 million Americans lacking access to a 401(k) or employer-sponsored retirement plan, BlackRock said the solution is timely.
“This product innovation will make saving for retirement even more accessible at a time when Americans are less confident about their retirement readiness than ever before,” said Anne Ackerley, Head of Retirement at BlackRock. “With nearly 50% of private sector workers unable to save through their employers, lack of access to a retirement savings plan is one of the most pressing challenges that needs to be addressed. The iShares LifePath Target Date ETF Suite provides a new way for millions of Americans to save and prepare for retirement, on their own terms.”
Addressing a crisis in retirement confidence
The eighth annual BlackRock Read on Retirement™ report shows that retirement confidence has dropped, with nearly 40% of independent savers, or individuals who do not have access to a retirement plan through their employers, feeling off track for retirement. This marks a 23% increase since last year. In addition, 47% of independent savers are leaning on cash to build their retirement nest eggs, missing out on potential investment growth that could be important to achieving their retirement goals.
However, nearly half (45%) of these independent savers say that having access to a financial professional or advice would help them feel on track for retirement, and a large majority (71%) say they would be interested in using a target date fund to save for retirement.
“Over 30 million Americans trust and turn to iShares in the search for new solutions and opportunities to meet their financial ambitions,” said Dominik Rohe, Head of Americas ETF and Index Investments business at BlackRock. ”And we want even more Americans to experience the benefits of our professional grade investment solutions firsthand. The iShares LifePath Target Date ETFs can help empower millions of people to build towards retirement with the convenience and simplicity of a single iShares ETF.”
A transformational savings tool
Target date funds make investing for retirement simple. Investors select the fund closest to their target retirement date and make regular contributions. The funds are professionally managed to provide diversification, automatic rebalancing, and risk adjustment over time. At the target retirement date, the fund is designed to roll into a retirement vintage with the goal of enabling investors to maintain consistent spending through their retirement.
“Since pioneering the first target date fund 30 years ago, BlackRock has continually transformed what it means to save for retirement for over 40 million Americans, providing optimized retirement income, emergency savings support, and more,” said Nick Nefouse, CFA, Global Head of Retirement Solutions at BlackRock. “With LifePath’s investment approach now accessible through the ETF structure, BlackRock is helping to lead the industry in retirement innovation.”
The iShares LifePath Target Date ETFs invest in a broad portfolio of underlying iShares ETFs and are designed to help investors stay on the path to retirement by adjusting over time, taking more risk early on, and gradually becoming more conservative as the target retirement date approaches. At the target retirement date, the ETFs are expected to transition into the iShares Target Retirement ETF. This suite of funds can help investors in many ways, including those who:
- Want to do more but don’t have access to a workplace retirement plan.
- Are looking to bolster their planning by complementing an existing 401(k).
- Want to roll out of a 401(k) plan into an IRA with a familiar, time-tested strategy and investment choice.
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