HomeFinance NewsPersonal financeTarget-Date Funds: Risky Retirement Bombshells?

Target-Date Funds: Risky Retirement Bombshells?


Op-ed: Target-date funds can be ‘a mixed bag’ for investors. Here’s why


Target-date funds aim to simplify retirement planning by automatically adjusting investment portfolios based on your age and retirement goal.

While these funds are popular, there are some drawbacks to consider.

Passive target-date funds have low fees, but actively managed ones can be expensive.

Additionally, younger investors may find the bond allocation too conservative, limiting potential returns.

The strict age-based approach may not account for individual risk tolerance and needs.

Despite their simplicity, target-date funds may not be optimal for everyone, especially those with complex financial situations or those seeking a more tailored approach.

Some financial advisors argue that target-date funds can be somewhat inflexible and fail to consider factors beyond age when determining risk profiles.

  • Overall sentiment: neutral
  • Positive

    “In fact, they are the default option for many plans, helping to explain why they make up nearly a quarter of 401(k) plan assets, according to the Plan Sponsor Council of America.”

    “Undoubtedly, such funds can be a handy tool, helping to make retirement planning easier.”


    “However, some important caveats.”

    “While passively managed target-date funds usually have reasonable pricing, actively managed ones can be expensive.”

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