A few years ago, I authored an article warning baby boomers in target date funds (TDFs) about the risk they are taking. It went viral:

But not much has changed because the reason for my warning has not yet materialized. The stock market hasn’t crashed – yet -- but it is showing signs that it will follow Stein’s Law soon, namely “If something cannot go on forever, it will end.”   

I’ve been warning baby boomers for a long time, creating the perception of being a Chicken Little. My warnings were being ignored, until recently thanks to Chris Carosa and his Fiduciary News. Surveys say that baby boomers in TDFs want to be protected as they approach retirement, and they believe that they are protected. Yet Why Doesn’t Anyone Care About Their 401k Anymore? accurately reports thatThe illusion of safety is the most dangerous kind. Participants have been told the defaults are “expert-managed” and “designed for them.” They believe it.

Baby boomers think they’re safe in their TDFs, but they are not. They just need to look, and they will see that they are exposed to high risk of losing their lifetime savings.

Removing the illusion of safety

I’ve written a lot about the risk in TDFs. My most recent article is Theory Versus Practice In Target Date Funds And Lifepaths where  I share the theory behind glidepaths and provide links to the articles that establish the theory. No one reads these, but anyone involved with TDFs should read them, especially fiduciaries.

Getting safe

A warning is meaningless without a course of action. I recommend that baby boomers get out of their TDFs and take back control of their risk at this critical time in their lives, but that’s not going to happen, so in my Revenge of the Baby Boomers article I speculate that baby boomers will get mad, and then they’ll get even.

After the crash, there will be an outcry for safety going forward that can be achieved as I describe in my Retirement with Dignity article. Unfortunately, it will take a crash to motivate reform and safety.

Baby boomers will learn the meaning of risk in the next crash, and so will their heirs. Their pain will be widely felt because 75 million baby boomers represent more than a third of the U.S. population, and they own half the nation’s wealth and do 70% of its consumer spending. Baby boomers are a formidable force to be reckoned with.

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