Option 1: I want a simple, yet diversified approach.
I’m looking for a fund that is designed to match the year I expect to begin making gradual withdrawals.
Target-date funds, such as the Long Beach Custom Funds in your 457 plan, have three features that you should consider:
Diversification — Each fund invests in several different areas of the stock and bond markets. This doesn't ensure you’ll avoid losses or generate profits but it can lower overall volatility, helping you stick with your investment strategy.
Risk Reduction Over Time — Each fund is designed to gradually reduce its risk level over time, as your investing time horizon shortens.
Gradual Withdrawals Over Time — Each fund transitions into a more income-oriented portfolio that is designed to be generally appropriate for investors taking gradual withdrawals over a long time period. After all, most individuals will need their money to last for many years in retirement.
A target-date fund is not a complete solution for all of your retirement savings needs. An investment in the fund includes the risk of loss, including near, at or after the target date of the fund. There is no guarantee that the fund will provide adequate income at and through an investor’s retirement. Selecting the fund does not guarantee that you will have adequate savings for retirement.