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How Target Employees Can Avoid Costly Retirement Mistakes

'Target employees should focus on long-term investment strategies that are grounded in historical performance rather than reacting to market trends or the allure of fleeting opportunities like gold or real estate, as these can lead to poor financial outcomes in retirement.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Target employees can strengthen their retirement outlook by avoiding the common pitfall of buying high and selling low, instead embracing a disciplined, long-term approach to investing that prioritizes sound financial principles over market speculation.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The pitfalls of overvaluing gold, real estate, and savings accounts in retirement planning.
The risks associated with the common mistake of buying high and selling low.
Strategies to make smarter long-term investment decisions to strengthen your financial outlook.

The most recent Gallup poll provides yet another concerning look at how many American investors, including those with Target, make retirement investment choices that could ultimately cost them a lot of money. For decades, countless investors have placed their financial future at risk by making ill-timed investments in assets such as real estate, savings accounts, or gold that are frequently volatile or fail to deliver long-term returns. Despite the age-old adage to avoid buying high and selling low, the most recent research indicates that many investors have not learned from their mistakes.

Gold: A Cautionary Tale

Depending on the state of the market, gold has been a recurrent trend in the financial sector, going up and down in value. Despite its inherent volatility, many investors appear to accept it as a long-term investment, particularly as its price rises. Gold is now regarded by 23% respondents as the best long-term investment, up from 14% only a few years ago, according to the most recent Gallup poll. The recent spike in gold prices, which hit a record high of $3,444 an ounce, is likely the cause of this increase. Historical evidence, however, presents a different image.

When gold hit its previous high in 2011, 34% of Gallup survey respondents said it was the best investment option. Over the following few years, however, the value of gold fell by almost 50%, leaving many investors with large losses. In actuality, gold, like many other assets, has the potential to be a bubble—its value can fluctuate significantly, putting investors at risk of purchasing at the peak and selling at a loss.

Gold is not the only metal that goes through this cycle of purchasing high and selling low. It exhibits the same pattern as other assets, such as stocks and real estate. The price swings of gold serve as a warning: chasing assets after they have already experienced a sharp increase in value might have devastating results, especially for Target employees looking to improve their financial outlook.

Misplaced Confidence in CDs and Savings Accounts

The pervasive notion that certificates of deposit (CDs) and savings accounts are sound long-term investments is one of the most concerning trends identified by Gallup's survey. These low-risk, low-return solutions were the top pick for long-term gain for 13% of respondents. There is a clear misinterpretation of how investments operate here.

These financial instruments have not historically produced sufficient long-term returns. In actuality, the S&P 500 has beaten short-term deposits in over 75% of five-year periods, 85% of 10-year periods, and more than 90% of 15-year periods since the 1920s. For example, over a 10-year period, the S&P 500 has, on average, tripled in value, yielding a 200% return. Conversely, throughout the same time span, CDs and savings accounts have only produced returns of 45% to 70%. Simply stated, it is unlikely that money held in a CD or savings account will grow at the pace required for a comfortable retirement, a key concern for Target employees nearing retirement.

The Stock Market: A Lost Chance

The relationship between the stock market and investors has also been troubling. According to Gallup's survey, even in bull markets, many are generally hesitant or completely skeptical about investing $1,000 in the stock market. One of the greatest strategies to build wealth over time has been the stock market, especially the S&P 500. The Dow Jones Industrial Average has risen from about 2,700 to about 42,800 since 1990. Public mood has, however, been especially positive at the wrong times, most notably in the late 1990s and right before the market crashed in 2007.

The time frame before January 2000, when 67% of Gallup respondents said they were confident in the stock market, is a revealing illustration. For those who had invested at the peak of the market, this was just before the dot-com bubble burst, wiping out a significant amount of value. The public has frequently expressed confidence about the stock market after it has already increased, only to be let down when the market corrects itself, despite this history. For Target employees, understanding this pattern is critical for making smarter investment choices.

The Most Overrated Investment Is Real Estate?

This year, 37% of respondents chose real estate as the 'best long-term investment,' continuing its 13-year trend at the top of the Gallup poll. Given the historical propensity of the property market to rise in value, this trend is not surprising. However, from a financial perspective, real estate has frequently performed worse than other investments.

Real estate has only increased in value at an average annual pace of 4.2% since the 1920s. Long-term returns from the stock market, gold, and even Treasury bonds are higher than this rate. Nonetheless, there are non-monetary advantages to property, such as the opportunity to live rent-free. Those who own their homes and are exempt from paying a landlord will find this especially alluring.

However, there are other expenses to take into account. The costs associated with owning, such as upkeep, property taxes, insurance, and real estate agents' fees, may reduce the returns. Additional expenses for rental properties include hiring a property manager and managing renters, some of whom may suddenly vacate or fall behind on their payments.

The leverage that real estate provides—buying a property with 20% down and borrowing the remaining 80%—is frequently linked to its allure. Real estate prices have increased in recent decades as home ownership has become more affordable due to declining mortgage rates. However, the benefit of leverage is lessened now that mortgage rates are higher than they were 20 years ago. Given the possibility of future price drops and the fact that housing costs are still at all-time highs, it is uncertain if real estate will continue to yield substantial returns. This uncertainty should be carefully considered by Target employees planning for retirement.

Purchasing High and Selling Low: The Risk

In the stock market, real estate, or gold, investors have frequently made the mistake of buying high and selling low. Many make the basic error of acting in this way. Real estate was the go-to investment during the height of the housing boom in 2000. However, the public abandoned the market when it crashed in 2008, at the same time that mortgage rates dropped and housing became more affordable. The gold market followed the same pattern, and the stock market is showing comparable patterns.

The takeaway from this is straightforward: rather than following trends and responding to market swings, investors should create a long-term plan founded on sound financial principles. This is true even though real estate is frequently a wise investment in specific situations. Focusing on the fundamentals, such as an asset's potential for long-term growth rather than its immediate price fluctuations, is essential for making wise investment decisions—especially for Target employees.

In Conclusion

A clear reminder of how investors continue to mismanage their retirement funds can be found in the Gallup survey. Whether it’s overvaluing gold, placing too much trust in savings accounts and CDs, or repeatedly misjudging the stock market and real estate, these mistakes can have long-term consequences. It’s important to understand that investments should be chosen based on their historical performance and long-term potential, not based on short-term trends or hype. By making informed, rational decisions and sidestepping the pitfalls of buying high and selling low, Target employees can better strengthen their financial outlook.

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Sources:

1. Arends, Brett. 'This is How Americans are Blowing Their Retirement Money — Again.' MarketWatch, 20 May 2025, www.marketwatch.com/retirement-blunders-2025 .

2. Brenan, Megan. 'Stocks Fall, Gold Rises; Real Estate Still Best Investment.' Gallup, 5 May 2025, www.gallup.com/retirement-investments .

3. Advisor Perspectives Team. 'Gold Gains in Gallup's Latest Poll.' Advisor Perspectives, 18 May 2025, www.advisorperspectives.com/gallup-gold-investment .

4. CBS News Staff. 'Should Seniors Invest in Gold with the Price So High?' CBS News, 22 May 2025, www.cbsnews.com/gold-investment .

5. Kiplinger Staff. 'Is Financial Advice From a Professional Worth $8,000?' Kiplinger, 26 May 2025, www.kiplinger.com/financial-advice-worth.

What are the key benefits provided by Target Corporation's Personal Pension Account and Traditional Plan for employees approaching retirement, and how do these plans ensure financial security during retirement years? Understanding the synergy between these two plans is essential for retirees, as they work together alongside Social Security and personal savings to replace a portion of an employee's paycheck after retirement.

Key Benefits of the Personal Pension Account and Traditional Plan: Target Corporation's pension plan includes two components: the Personal Pension Account and the Traditional Plan. These plans work in tandem to replace a portion of an employee's paycheck during retirement. The Personal Pension Account provides pay credits and interest that accumulate over time, while the Traditional Plan uses a final average pay formula. Together with Social Security and personal savings, these plans help ensure financial security in retirement(Target Corporation_Dece…).

How can employees elect different payment options, such as the Single Life Annuity or the Joint and Survivor Annuities, within Target Corporation's pension plans? It is crucial for employees to grasp not only the financial implications of these choices but also the necessary spousal consent required when designating a joint annuitant, particularly if the chosen joint annuitant is not the employee's spouse.

Payment Options and Spousal Consent: Employees can elect different payment options, including the Single Life Annuity, which provides the highest monthly benefit and ceases at the retiree’s death, or the Joint and Survivor Annuity, which continues payments to a surviving spouse. To elect a non-spouse as a joint annuitant, spousal consent is required, and this must be notarized to ensure compliance with plan rules(Target Corporation_Dece…).

In what circumstances might benefits not be paid under the Traditional Plan, and what steps can employees take to ensure they remain eligible for their pension benefits upon termination of employment? Target Corporation's policy outlines several scenarios where benefits could be denied, making it necessary for employees to be proactive in understanding their rights and responsibilities concerning plan participation.

Circumstances for Denial of Benefits under the Traditional Plan: Benefits under the Traditional Plan may not be paid if an employee leaves before becoming vested (less than three years of service). Employees should ensure they meet the vesting requirements and maintain eligibility by avoiding termination before they reach the minimum service period(Target Corporation_Dece…).

What procedures should employees follow to report changes in marital status, address, or beneficiaries to ensure compliance with the requirements of Target Corporation's pension plan? Employees must understand the importance of timely reporting these changes to avoid potential issues with their retirement benefits and ensure that their pension plan information remains up-to-date.

Reporting Changes in Marital Status or Beneficiaries: Employees must promptly report changes in marital status, address, or beneficiaries to Target's Benefits Center to ensure their pension records remain up-to-date. Failing to do so can lead to delays or issues in processing pension benefits(Target Corporation_Dece…).

How does Target Corporation determine the final average pay used to calculate retirement benefits under its pension plans, and what factors may affect this calculation? Employees nearing retirement should be fully informed about how their compensation is considered in determining their pension benefits, including aspects such as bonuses and overtime that may influence their final average pay calculation.

Final Average Pay Calculation: Target Corporation calculates final average pay based on the five highest years of earnings out of the last 10 years of service. This includes regular pay, overtime, bonuses, and commissions but excludes items like workers' compensation or long-term disability payments(Target Corporation_Dece…).

How can employees begin the process of rolling over their Target 401(k) accounts into the Pension Plan, and what advantages does this Pension Purchase Program offer? Understanding this rollover option is vital for maximizing retirement benefits, as it can provide employees with a stable income stream while avoiding unnecessary fees typically associated with purchasing annuities outside the plan.

Rolling Over 401(k) into the Pension Plan: Employees can roll over their 401(k) accounts into the Pension Plan using the Pension Purchase Program. This option offers several advantages, including avoiding fees associated with purchasing annuities outside the plan and receiving a stable income stream during retirement(Target Corporation_Dece…).

What are the implications of a participant's age and joint annuitant's age on the payment amounts under the various Joint and Survivor Annuity options at Target Corporation? Employees should be aware of how age differences can impact their pension payouts, as the specific percentages payable under these options may vary based on the ages of both the participant and their designated joint annuitant.

Effect of Participant and Joint Annuitant’s Age on Payments: The Joint and Survivor Annuity options are influenced by the ages of both the participant and the joint annuitant. The younger the joint annuitant, the lower the monthly payout due to actuarial adjustments. Employees should consider these factors when selecting an annuity option(Target Corporation_Dece…).

How are retirement benefits managed during potential plan terminations or amendments at Target Corporation, and what protections are in place for employees in these scenarios? Employees should be well-informed regarding their rights in the event of changes to the pension plan, including how benefits would be distributed and under what circumstances they may remain fully vested.

Plan Terminations or Amendments: In case of plan terminations or amendments, vested benefits are protected, and employees will receive their earned pension. If the plan is amended or terminated, Target ensures that vested benefits are distributed according to the plan's terms(Target Corporation_Dece…).

For employees retiring or leaving Target Corporation, what options are available with respect to unused vacation time and how might this be factored into pension calculations? Understanding how accrued time off translates into benefits could have a significant impact on an employee's financial positioning upon retirement.

Unused Vacation Time and Pension Calculations: Unused vacation time does not directly affect pension benefits but can be included in eligible earnings calculations that determine final average pay. Employees nearing retirement should consult with Target’s Benefits Center to understand how unused time may impact their overall benefits(Target Corporation_Dece…).

How can employees contact Target Corporation for assistance with their retirement benefits to address any questions or concerns they may have about their pension plans? Accessing the right resources and support is essential for employees to navigate their retirement benefits effectively. They can reach out to the Target Benefits Center at 800-828-5850 for more specific inquiries related to their personal circumstances. These questions aim to enhance employees' understanding of their retirement benefits, ensuring they are well-prepared for their transition into retirement.

Contacting Target for Pension Assistance: Employees can contact the Target Benefits Center at 800-828-5850 for assistance with their retirement and pension plans. This center provides support with any questions related to pension options, payments, and administrative requirements(Target Corporation_Dece…).

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For more information you can reach the plan administrator for Target at 10 South Dearborn Street 48th Floor Chicago, IL 60603; or by calling them at 1-800-440-0680.