Glossary
Target-date fund
A fund built around a retirement year that starts stock-heavy and shifts gradually toward bonds and cash along a preset glide path.
On this page
A target-date fund is a single fund designed for people retiring around a particular year, named in the fund itself: a "2060" fund for someone planning to retire around 2060. It holds a mix of stock and bond funds and automatically moves from mostly stocks toward more bonds and cash as that year approaches. It matters because it is the default investment in a large share of US 401(k) plans, so many savers own one without having chosen it.
How it works
The schedule of that shift is the glide path. Two funds with the same target year can follow very different paths.
Some funds glide "to" retirement, reaching their most conservative mix at the target date. Others glide "through" it, continuing to cut stock exposure for a decade or more afterward.
What to check
The target year is not a guarantee: a fund can lose money at or near the date, as several did in 2008 and 2022. Compare costs, since the expense ratio covers the underlying funds and ranges from under 0.10% for index-based series to well above 0.50% for some actively managed ones. Look at the stock share at the target date, which reveals how much risk the fund keeps.
Holding a target-date fund alongside other funds can undo its design, because the fund already aims to be a complete portfolio. Its allocation is also based on age alone, not on your other savings, pension or tolerance for risk.