New BlackRock ETFs bring target-date retirement investments to the masses

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One of the world’s largest asset managers is rolling out a suite of exchange-traded funds aimed at helping workers without retirement plans save for their sunset years.

BlackRock’s new ETF product line includes investments formulated for workers of all ages, from older Americans rolling their 401(k)s over at the end of their careers to young people who are 40 or more years out from retirement.

BlackRock designed the Target Date Funds to fill a growing void in the market. While many older Americans have access to retirement plans through their employer, there are millions of gig and wage workers who don’t.

This trend is stronger in Florida than any other state — according to ADP, 22% of the state’s workforce are gig workers, and Miami is currently one of the top metros for gig workers. Florida is also home to six out of the top 10 cities for self-employed workers.

For these workers, the ins and outs of investing can be onerous. Building a smart portfolio that’s appropriately diversified, whether for growth or wealth preservation, takes research.

“That is a tough decision for people to make and think about that decision overlaid with the decision of ‘what, and how much, do I need to save for retirement? And how should my asset allocation look?’” said Dominik Rohe, BlackRock’s Head of Americas ETF and Index Investments.

“These are very complicated things we’re all facing. So, for us, what we are spending a lot of time on is ‘how do we make this as easy as possible for people?’”

While there are IRA products that use a similar strategy, they often have minimum buy-ins of a couple thousand dollars. BlackRock’s Target Date ETFs don’t — investors can get started for a few bucks and a few minutes of their time.

“Just $25 in a brokerage account gets you started,” said Nick Nefouse, BlackRock’s Global Head of Retirement Solutions.

He added, “A lot of this really comes down to access. We need to be able to take the learnings we’ve had in the 401(k) world and bring them down into the direct investor world. So being able to provide more education, being able to provide more of the types of products that have been successful in the 401(k) world here is what I think is going to be a huge step forward.”

The ETFs are also a viable investment option for retirees, which Florida has in abundance. The state is currently No. 2 in residents over the age of 65 and has the nation’s largest net migration of people 60 and older. These investors may be rolling over their 401(k)s or other employer sponsored plans to continue growing their wealth after leaving the workforce.

There are 10 ETFs in the initial rollout, with target retirement dates starting in 2025 and in 5-year blocks out to 2065. They all debut at $25 per share.

“This product innovation will make saving for retirement even more accessible at a time when Americans are less confident about their retirement readiness than ever before,” said Anne Ackerley, Head of Retirement at BlackRock.

“With nearly 50% of private sector workers unable to save through their employers, lack of access to a retirement savings plan is one of the most pressing challenges that needs to be addressed. The iShares LifePath Target Date ETF Suite provides a new way for millions of Americans to save and prepare for retirement, on their own terms.”