Let’s take a look at how the three-stage glidepath works.
Allocations as of 1/2/2019
Earlier in your working years, the greatest risk to your retirement savings may be that you are not taking enough risk. During the Accumulation stage, the Day One Funds have a higher exposure to equities and non-traditional investments that provide a greater potential for growth.
In the 10 years leading up to the target date and through the first 10 years following the target date objectives shift from growing assets to protecting retirement savings from potential market losses. During the Preservation stage, the Day One Funds reduce exposure to equities and shift into more conservative, less volatile assets to help provide additional protection against equity market declines.
Inflation Protection Stage
With a long retirement ahead, making sure your savings can keep pace with the rising costs of healthcare, housing, food and other necessities is very important. To help protect the purchasing power of your savings during this stage, the Day One Funds provide higher exposure to asset classes that historically have performed well during high inflationary periods.
As shown in the chart above, each Day One Fund’s asset allocation follows a glidepath that becomes more conservative as the applicable target date approaches by reducing exposure to equity investments and increasing exposure to fixed income investments. The glidepath continues to adjust allocations in this manner for approximately 10 years past the target date, at which point the asset allocation of each target-date fund will be similar to that of the Day One Income Fund, which maintains a static asset allocation. The glidepath assumes retirement at approximately age 65 and contributions beginning at approximately age 18.
Each Day One Fund’s underlying asset allocation is reviewed periodically to determine whether the glidepath (or, in the case of the Day One Income Fund, the prescribed asset allocation) and underlying funds in which such fund invests remain suitable to meet the fund’s investment objective. As a result of this review, the glidepath and/or the allocation of the fund’s assets among the underlying funds may be modified.
Glidepath and asset allocations are as of the calendar quarter referenced above. The asset allocation changes over time. PRIAC, together with QMA, may change the Glidepath, asset allocations and Underlying Funds.
Asset allocation does not assure a profit or protect against a loss in declining markets.
The Day One IncomeFlex Target Funds follow a distinct glidepath. For more information review the IncomeFlex Target tab on this site.