Age Based Investing
Age Based Investing is an investment program under which your investment fund automatically changes as you get older so that your exposure to the stock market is reduced as you age. For example, the Maximum Growth Investment Option is well suited for individuals under age 30 while the Wealth Building Investment Option is well suited for investors between the ages of 30 and 40. The Maximum Growth Investment Option has 70% exposure to the stock market while the Wealth Building Investment Option has 50% exposure to the stock market. If you begin to participate in Age Based Investing at age 25, your individual account (including new contributions) will be invested in the Maximum Growth portfolio. When you reach age 30, your individual account (including new contributions) will automatically be invested in the Wealth Building portfolio. Once you have elected Age Based Investing, you do not need to make any further investment choices. Your investment fund, and therefore, your exposure to the stock market will automatically be changed to give you an asset allocation that is appropriate to your age. The Investment Options and the ages at which your individual account will be automatically invested in those Funds is as follows:
Maximum Growth 70% under age 30
Growth Income 35% age 39 to under age 50
Current Income 15% age 50 and over
If you do not select a Life Stage Investment Option, your Individual Account will be invested following the Age Based Investing program. Once you participate in Age Based Investing, whether you elected to do so or participated by default, you are free to make different investment choices provided under the Plan. However, once you elect a different investment option for either your new contributions or your existing account balance, you will no longer participate in Age Based Investing program unless you later elect to do so.
The Age Based Investing program is not ideal for everyone. You need to take into consideration your own risk tolerance and retirement needs when deciding which Investment Option is best for you.
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Investopedia – Portfolio