- A 403(b) retirement plan allows public sector workers to save for retirement.Cash image by Greg Carpenter from Fotolia.com
Traditional defined benefit pension plans are shrinking, and these days workers are being asked to shoulder more of the burden of their own retirement planning. If you work for a school district or nonprofit agency, your employer may offer you a 403(b) plan, and that plan can provide a basis for your retirement planning.
Aggressive Growth Funds
- The suitability of aggressive growth funds for a 403(b) plan depends on a number of factors, including your tolerance for risk, your desired asset allocation and the number of years you have until retirement. If you are a young worker with decades to go until retirement, you might have time to ride out the inevitable bumps along the way and profit from the aggressive growth of companies at home and abroad. If you are closer to retirement, aggressive growth mutual funds may be too risky, and you may not have time to recover any funds lost during a slow market.
Target Date Retirement Funds
- Investors looking for a "set it and forget it" approach to retirement often look to target date retirement funds, according to the "Los Angeles Times." But the reality is not always that simple, the newspaper reports. In a target date fund, the asset allocation is automatically adjusted as the investors move closer to retirement. While these target date funds can be good choices, investors still need to keep an eye on the performance of the funds and the asset allocation as reported in the annual report provided by the mutual fund company.
- While managed mutual funds attempt to beat the market by selecting individual stocks, index funds simply purchase all of the stocks in a given index. This approach guarantees investors will do at least as well as the market as a whole. Over the long term, managed mutual funds have a very difficult time beating their respective indexes. Most managed funds simply cannot match the performance of a simple index fund, according to CNN Money.com. In addition to superior performance, index funds also tend to have much lower costs than managed funds, and that allows 403(b) investors to keep more money in their own pockets.