Target-Date Fund

A target-date fund (TDF) is an "all-in-one" retirement investment that automatically adjusts its asset allocation over time, becoming more conservative as you approach your target retirement year.

How It Works:

1. Choose fund based on expected retirement year (e.g., 2055 Fund)
2. Fund starts aggressive (heavy stocks)
3. Automatically shifts to conservative (more bonds)
4. "Glide path" continues into retirement

Glide Path Example (Vanguard Target 2055):

Years to Retirement	Stocks	Bonds
30+ years	90%	10%
20 years	85%	15%
10 years	70%	30%
At retirement	50%	50%
7 years after	30%	70%

Key Benefits:

• Simplicity: One fund for entire portfolio
• Automatic Rebalancing: No manual adjustments needed
• Diversification: Holds thousands of securities
• Professional Management: Experts handle allocation
• Set and Forget: Ideal for hands-off investors

Types:

• "To" Funds: Reach most conservative at retirement
• "Through" Funds: Continue adjusting after retirement

Major Providers:

Provider	Fund Family	Expense Ratio
Vanguard	Target Retirement	0.08%
Fidelity	Freedom Index	0.12%
Schwab	Target Index	0.08%
T. Rowe Price	Retirement	0.55%

Considerations:

• Higher expense ratios than DIY portfolios
• Glide paths vary by provider
• One-size-fits-all may not fit your situation
• Check underlying holdings

Ideal For:

• 401(k) default investment
• Hands-off investors
• Those who want professional allocation
• People who won't rebalance on their own

Not Ideal For:

• Active investors
• Those with specific allocation preferences
• People who want tax-location optimization