Target-date funds automatically adjust your investment mix from aggressive (mostly stocks) to conservative (more bonds) as you approach your target retirement year. You pick the fund matching your expected retirement year (e.g., 2060), invest regularly, and the fund handles diversification and rebalancing. They're ideal for 401(k) investors who want a simple, effective approach.
Bottom line:
Key Takeaways
- Pick the fund year closest to your expected retirement (e.g., Vanguard Target Retirement 2060)
- The fund automatically shifts from stocks to bonds as you age (glide path)
- One fund provides complete diversification across U.S./international stocks and bonds
- Expense ratios range from 0.08% (Vanguard) to 0.70%+ (some 401k plans)
- 90% of target-date fund investors report being satisfied with the approach
A target-date fund is a single mutual
A target-date fund is a single mutual fund that holds a diversified mix of stocks and bonds, automatically becoming more conservative over time. A 2060 fund today might hold 90% stocks and 10% bonds. By 2050, it might be 60/40. By 2060, it might be 40/60.
This automatic adjustment — called the 'glide path' — replaces the need for you to choose individual funds, decide on asset allocation, or rebalance your portfolio. It's professional portfolio management in a single fund.
Select the fund year closest to when
Select the fund year closest to when you expect to retire. If you're 30 and plan to retire at 67, choose a 2063 fund (the closest available year). If your plan doesn't offer your exact year, round to the nearest option.
If you want a more aggressive portfolio, choose a fund 5-10 years later than your retirement date. For a more conservative approach, choose one 5 years earlier. But the 'correct' year is a perfectly good starting point.
Vanguard Target Retirement Funds
Vanguard Target Retirement Funds: Lowest expense ratios at 0.08%. Uses four underlying Vanguard index funds. The gold standard for target-date investing.
Fidelity Freedom Index Funds: Expense ratios of 0.12%. Fidelity's index-based target-date series competes directly with Vanguard on cost.
Schwab Target Index Funds: Expense ratios around 0.08%. Another excellent low-cost option with broad diversification.
Avoid actively managed target-date funds with expense ratios above 0.50% — the higher fees rarely produce better results.
Target-date funds are designed as your only
Target-date funds are designed as your only investment in a given account. Combining them with other funds creates unintended allocation overlaps. If you hold a 2060 fund, don't also buy a separate bond fund or international fund — the target-date fund already includes those.
Different providers have different glide paths. Some are more aggressive, some more conservative. If you have strong preferences about allocation, you may prefer building your own portfolio from individual index funds.
How We Evaluated
Fund data from Morningstar and fund prospectuses as of Q1 2026. Glide paths from each provider's published methodology.Frequently Asked Questions
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