When you’re saving for retirement but don’t want to pick stocks or manage asset allocation yourself, a target-date fund, a type of mutual fund designed to grow and then protect your money based on your expected retirement year. Also known as a life-cycle fund, it’s built to become more conservative over time—starting with more stocks when you’re young and shifting to bonds and cash as retirement nears. You don’t need to remember to rebalance or adjust your risk. The fund does it for you, automatically. That’s why millions of people use them in their 401(k)s—they’re the default option for a reason.
What makes a target-date fund work is its asset allocation, the mix of stocks, bonds, and other assets inside the fund. Early on, it might be 90% stocks and 10% bonds. By the time you hit your target year—say, 2045—it could drop to 50% stocks and 50% bonds. But here’s the catch: not all target-date funds are the same. Some get conservative faster than others. Some hold more international stocks. Some use ETFs. Others use actively managed funds. The fund’s glide path, the schedule that shows how its risk level changes over time is the key detail you need to check. Look at the fund’s prospectus. See how it behaves five years before and after your target date. If you plan to retire at 65 but the fund turns super safe at 60, you might miss out on growth you still need.
Target-date funds are great if you want to set it and forget it. But they’re not magic. They still charge fees—some are as low as 0.10%, others creep up to 0.80% or more. And while they reduce the stress of managing your portfolio, they don’t eliminate the need to understand what you’re buying. If your 401(k) offers multiple target-date funds with the same year, pick the one with the lowest expense ratio. If you’re using one outside a retirement account, make sure it fits your tax situation. And remember: if you’re saving more than $100,000, you might want to consider direct indexing or a custom portfolio for better tax control.
What you’ll find below are real breakdowns of how these funds perform, how fees eat into your returns, and how they compare to other automated options like robo-advisors. You’ll see which ones actually deliver on their promise—and which ones leave you with more risk than you bargained for. No fluff. Just what you need to know to pick the right one—or decide if you should skip it altogether.
Target-date fund glide paths automatically reduce risk over time by shifting from stocks to bonds as retirement nears. Learn how different providers design these paths, why some are too conservative, and how to pick the right one for your retirement goals.
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