Saving for retirement is hard. For many, investing that money may be even harder. Target-date funds have become a nearly $5 trillion industry by largely solving that problem.
The “target date” is the year of an investor’s expected retirement (but it could apply to any other long-term savings goal, such as college tuition). The funds have a heavier weighting in stocks early on, when the investor is younger and can better weather losses. They shift gradually over time to bonds, when safety becomes more important.
It’s investing on autopilot, so much so that many call the premise of the funds “set it and forget it.” That works for many holders of the funds. But target-date funds come with no guarantees. It’s important to choose the right fund for you and to determine where it fits in your portfolio.
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It can be an all-in-one diversified solution to a savings challenge, a core around which you layer other holdings or just one of many investments. As with any fund, it’s also important to check in periodically to see how well it still fits.
Failing to do so may cause you to veer off course — a serious risk for retirement savers. “The negative thing with the target-date funds is that they don’t know your life,” says Mark Wilson, founder of MILE Wealth Management in Irvine, California.
Whatever the weaknesses, target-date funds’ growth has been explosive: The market increased 20% in 2025 to $4.8 trillion, according to research firm Morningstar. Assets held by target-date funds, both inside and outside of workplace retirement plans, have grown 11.9% per year for a decade. A large part of that is performance, in addition to popularity.
With bonds in the mix, they won’t keep up with stocks in a bull market, but most target-date fund holders saw double-digit returns in 2025, Morningstar reports.
A long-term trend toward sharply lower costs has added to the appeal. The average target-date fund had an expense ratio of 0.55% in 2015; in 2025, it was 0.27%. Competition has pushed fees for the cheapest offerings from fund companies including Vanguard and Fidelity to less than 0.10%.
And the funds, which largely contained actively managed investments at the industry’s inception, have followed the larger trend of the fund industry by increasingly embracing index investing.
Encouraging good behavior
There are certainly benefits to a “set-it-and-forget-it” approach. Andrew Jacobs Van Merlen, a portfolio manager of the target-date strategies for fund company T. Rowe Price, says his firm conducted a study that suggests target-date investors are about 7.5 times less likely to trade in any given quarter.
“And that relationship holds in periods of market volatility, which is really critical,” he says. Adds MILE’s Wilson: “People who are in target-date funds tend not to panic. They’re better behaviorally than other folks typically are.”
The downside is that investors may lull themselves into thinking a retirement-oriented fund is safer than other funds. Many target-date funds tumbled in the financial crisis of 2007-09. More recently, investors who were shifting into heavier bond allocations just as interest rates started to climb in 2022 were in for a rude shock, because bond prices fall as interest rates rise.
William Connor, a wealth adviser at SAX Wealth Advisors, says one of his clients came to him, bewildered. “He asked, ‘What happened? Wasn’t I supposed to get more conservative?’ “
A word about workplace plans
Although substantially similar to target-date offerings that anyone can buy, the funds you’re likely to find in your workplace retirement plan may sport some key differences. For one, they’re probably cheaper than conventional offerings. You’ll likely have access to a less expensive institutional share class, for starters.
Or you may be offered funds legally structured as “collective investment trusts,” or CITs, available only in workplace plans. Typically, a fund company takes the exact same asset mix that’s in their conventional target-date mutual fund and places it in the CIT structure. Less administration, marketing and regulation — including lighter disclosure requirements — for CITs has added up to lower costs.
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You may also see more innovation, at least at first, in workplace funds — for good or bad. On the plus side, some firms, as part of their target-date offering, are including an annuity or some other structure for guaranteed annual income post-retirement. BlackRock launched an annuity-based fund in its LifePath series in 2024, and Vanguard has announced a partnership with TIAA, the long-time pension and annuity provider.
On the jury-is-still-out side is the introduction of private assets into workplace target-date funds. Franklin Templeton, for one, introduced a line of Retirement Advantage Plus funds, with the “plus” indicating that the series provides “modest allocations to private real estate and private credit.”
Private real estate has been part of some target-date allocations for years, but proposed rule changes at the Department of Labor could broaden the push into private assets, with the DoL estimating the changes could prompt 4.5 million plan participants to put $178 billion in target-date funds with alternative investments.
“I’m a big fan of private investments for sophisticated investors,” says SAX’s Connor. “I’m very wary about them going into these retirement plans.”
Pay attention to the glide path
No matter whether you’re choosing a retirement plan offering or considering a target-date fund for your personal portfolio, the so-called glide path will be one of your most important considerations. The glide path refers to a fund’s progression from a heavy stock weighting to a majority allocation to bonds — and that can vary meaningfully from fund to fund.
Target-date funds are classified as “to” retirement — meaning they stop adjusting allocations on their target date — or “through” retirement, meaning managers tweak the mix for up to decades more after. (Most of the funds mentioned here are through retirement.) Some funds with a retirement date 40 or more years in the future are 99% stocks, while others are barely over 70%, according to Morningstar. The median allocation to stocks in funds with a target 40 years from 2025 is 93%.
Target-date funds today, in the aggregate, contain a higher allocation to stocks than their forebears did, in recognition that people are living longer in retirement and need the “growthier,” inflation-beating returns of stocks to pay for it.
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Even so, many advisers think the stock allocations are still not high enough. And some investors may decide they’re able to tolerate a bit more risk than allowed by the fund that corresponds to the target date they have in mind. There’s a workaround for that, Connor sometimes tells his clients: “You want to retire in 2045? Pick the 2055 fund. That’ll keep you a little more aggressive for a little longer.”
Investors adding a target-date fund to their own portfolio must also choose whether the underlying investments in their target-date fund are actively or passively managed. (A target-date fund can never be totally passive, because choosing how to allocate investments in each year of the path to retirement is an active choice by its managers.) The companies that sponsor target-date funds typically invest in a mix of their own mutual funds. Vanguard, not surprisingly, uses its index funds. Other target-date sponsors use active funds; some, including Fidelity, offer the choice of a blend of active and passive.
Today, 80% of target-date fund assets are held by five firms. Vanguard is at the top with 37% market share, followed in order by Fidelity, T. Rowe Price, BlackRock and Capital Group. To help you understand your workplace options or choose a fund on your own, we took a closer look at each of their offerings. Returns, expense ratios and other data are as of May 31 and apply to publicly available fund offerings, unless otherwise indicated.
Note that most target-date funds have several share classes, aimed at different types of investors, with varying expenses. The funds mentioned here either carry no sales charge or can be found load-waived at some, but not all, major online brokerage platforms, such as Fidelity, Schwab and E*Trade.
Vanguard Target Retirement
Vanguard’s index-based approach drives one of the lowest expense ratios among target-date funds: 0.08% across publicly available mutual funds with target dates from 2020 to 2070.
The funds start with an allocation of about 90% in stocks and about 10% in investment-grade bonds, then start down the glide path about 25 years before the target date, around age 40 for someone retiring at age 65. At age 60, the split is 60% stocks and 40% bonds, and at 65, it’s 50-50. Vanguard believes 72 is the most common age to start withdrawals, so the funds move to their final allocation, 30% stocks and 70% bonds, seven years after the target date.
Investors in Vanguard’s CITs, but not in its mutual funds, have the choice to remain on the default glide path or freeze their stock allocation at 50% by converting to a balanced fund offered in workplace plans with a higher weighting in stocks.
For nearly the entire glide path, the underlying holdings of Vanguard’s target-date funds include just four Vanguard index funds: Total Stock Market, Total Bond Market, Total International Stock and Total International Bond.
“With target-date funds, you’re talking 40, potentially 50 years of investment if you hold this throughout your entire life cycle into retirement,” says Brian Miller, the head of multi-asset product management for Vanguard. “It’s hard for any manager, even a really good manager, to consistently outperform over that period of time.”
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Miller says Vanguard evaluates the allocations every year, considering population characteristics and capital market assumptions, and has not recently changed its asset allocations. “We continue to feel that those numbers make sense for our investors.”
The funds have typically been middle-of-the-pack performers, although they meet or beat their benchmarks in most years. Vanguard Target Retirement 2030 (VTHRX), as well as the 2045 (VTIVX) and 2065 (VLXVX) iterations, rarely fell into either the top or bottom 25% of their categories in each of the past 10 years. The 2030 fund, however, finished in the top 15% of its category from 2023 to 2025. It has landed in the bottom half only once in 10 years. (Morningstar rates target-date funds only against their peers with the same target year.)
Workplace investors can expect to see CITs with an annuity option debut later this year. A portion (up to 25%) of investors’ target-date fund holdings will fund the annuity in the years leading up to retirement; at retirement or later, investors can choose whether (and how much) of those savings to annuitize for guaranteed lifetime income.
Fidelity Freedom
The firm has three series: Freedom funds, which are actively managed; Freedom Index funds, which are passive; and Freedom Blend funds, which mix the two strategies.
For individual investors, the Freedom funds have expense ratios ranging from 0.46% to 0.68%; the Blend funds have expense ratios from 0.41% to 0.47%; and the Freedom Index funds have an expense ratio of 0.12%.
Last September, Fidelity said it would update its glide paths to boost stock allocations and reduce bond exposure for both early career investors and investors in retirement. The boost to the early career stock allocation is 5 percentage points; retirees will see stocks increase between 0.5 and 0.9 percentage point, depending on the target date.
The allocation shifts started in the fourth quarter of 2025, and Fidelity expects to complete the change by the end of the first quarter of 2027. That means that by then, Fidelity’s 2070 funds will invest 95% of assets in stocks, while the 2030 funds will have a bit less than 60%. The firm’s 2010 funds, whose holders would be at least 80 years old right now if they retired at age 65, will hold 30.5% of assets in stocks.
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Fidelity also said it will increase exposure to inflation-sensitive assets for investors near and in retirement through an addition of commodities and an increase in U.S. Treasury inflation-protected securities. Fidelity says it’s making the changes because investors are concerned about longevity and an increasing reliance on personal savings and workplace-plan assets instead of guaranteed pensions to support their retirement spending. The firm also says it sees the potential for continued inflation.
The Fidelity Freedom Index funds have been strong long-term performers, but they “have experienced some headwinds of late,” says Morningstar analyst Hyunmin Kim, who notes that the funds had a smaller allocation to U.S. stocks than many peers and moved into bonds in 2021, just before a sharp increase in interest rates. (Bond prices fall when interest rate rise.)
That stock allocation, however, helped the funds beat most peers in 2025 as international stocks outperformed. Fidelity Freedom Index 2030 Investor (FXIFX) and Fidelity Freedom Index 2045 Investor (FIOFX) have finished in the top half of their peer group in seven out of the past 10 years.
Fidelity Freedom Index 2065 Investor (FFIJX), which has only a six-year history, has turned in a mixed performance over that time, finishing in the top 25% in 2025 and near the top third in 2022, but worse than 85% of peers in 2021.
T. Rowe Price Retirement, Target and Retirement Blend
T. Rowe Price has one of the heaviest allocations to stocks of any target-date fund provider. The firm has three sets of target-date mutual funds available to individual investors: Retirement, Target and Retirement Blend.
The Retirement series is 98% invested in stocks 45 years out from the retirement date and falls to just 55% at the retirement date. Stock exposure remains at 30% roughly three decades after retirement, when a fund holder who retired at age 65 would be about 95 years old. The Target series has a less-aggressive glide path that starts similarly but shifts more to bonds slightly sooner than the Retirement series and ends up at 42.5% in stocks in its target year.
The firm’s philosophy is that a tilt toward stocks is a must for most savers. “If you’re looking at savings behavior of most Americans versus what they’re going to need, they’re under-saving,” says Jacobs Van Merlen. “That means that they need their assets to work a little bit harder to mitigate the risk of running out of money.”
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T. Rowe’s Blend series, introduced in 2018, mixes the active management of the Retirement series with passive index investing. The Blend funds retain the same glide path, including stock allocations, as the Retirement series funds.
Fees across all three series of funds for individual investors range from 0.34% to 0.64%, with the Blend funds at the low end of the range.
The stock-heavy mix has helped the firm’s funds outperform in many years of the bull market. T. Rowe Price Retirement 2030 (TRRCX) has four top-10 annual finishes in the past decade, and the fund ranked in the top 11% and 13% in two other years.
The shop’s managers aren’t infallible, however, with some “uncharacteristically weak” security selection and tactical calls recently leading to a mixed performance for the Retirement series, which otherwise has strong long-term returns, says Morningstar analyst Greg Carlson.
T. Rowe Price Retirement 2065 (TRSJX) has finished in the top half of its peers only twice in its five full calendar years of existence, and it has twice landed in the bottom 20%.
BlackRock LifePath
BlackRock’s target-date strategy is called LifePath, and its path can be traced back to the beginnings of the industry, when Wells Fargo Investment Advisors launched its funds in 1993. (Barclays Global Investors acquired the Wells Fargo business in 1995, and BlackRock bought the Barclays operation in 2009. The LifePath name has been constant.)
There are two main series of funds: LifePath Index and the actively managed LifePath Dynamic. A smaller series, LifePath ESG, uses environmental, social and governance factors in its investing. A newer series called LifePath Paycheck, launched in 2024, includes an annuity-based income option that is only available in workplace-based retirement plans.
LifePath funds have heavy stock weightings early on but make a greater shift toward bonds during the glide path than most target-date products. At 45 years from the target date, the LifePath Index glide path is 99% stocks, 1% bonds. It drops to 95% stocks 25 years out and 65% stocks 10 years out. At retirement date, stocks make up just 40%.
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LifePath Index funds have an expense ratio of 0.39%; the ESG Index funds charge 0.50%; and the Dynamic funds have annual expenses ranging from 0.84% to 1.59%. Availability of the funds with no load or fee varies depending on the brokerage platform.
Thanks in part to heavier bond holdings than its peers, BlackRock LifePath Index 2030 Investor A (LINAX) has finished in the bottom half of peers in eight of the past 10 years. BlackRock LifePath Index 2045 Investor A (LIHAX) has three finishes in the top third of peers over the past decade but may struggle to outpace peers as it adds to its bond mix.
BlackRock introduced target-date exchange-traded funds called iShares LifePath ETFs in November 2023. The funds, which invest in iShares stock and bond index funds such as the iShares Russell 1000 ETF, have target dates ranging from 2030 to 2070. The expense ratios range from 0.08% to 0.12% — comparable to the cheapest index mutual funds from Vanguard and Fidelity.
American Funds Target Date Retirement
The glide path for Capital Group’s American Funds moves in two ways: The ratio of stocks to bonds grows more conservative over time, and the types of stocks also change. Early in the glide path, the funds’ stock investments tilt toward growth-oriented stocks; as the target date approaches, the funds tilt more toward dividend-paying stocks.
The glide path keeps stocks near 90% of holdings until about 15 years to retirement. At retirement, stocks fall to just below 50%. The funds are designed “through retirement,” so the final stock allocation, at about 30 years after retirement, is roughly 30%.
That post-retirement stock allocation is a slight downward adjustment of a few percentage points, says Kelly Campbell, who leads the multi-asset solutions business at Capital Group. “In our most recent assessment we decided to modestly adjust equity allocations for essentially the first time in a decade and a half because we believe it will make the glide path a bit more resilient.”
Schwab, Fidelity and E*Trade all sell American Funds’ F-1 shares with no load. The F-1s mirror the company’s Class A shares, which have a 5.75% sales charge. The F-1 class of funds have expense ratios ranging from 0.63% to 0.75%.
The American Funds offerings have some of the better performance records among target-date funds: About 20% with a 10-year track record rank in the top 10% of their category, according to Morningstar. American Funds’ 2030 Target Date Retirement (FAETX) has six finishes in the top 25% of peers in the past decade. American Funds’ 2045 Target Date Retirement (FATTX) has five. The funds’ move from growth stocks to dividend stocks as the target year gets nearer has hurt those funds’ performance in years when more growth-oriented fare shines.
Strong long-term performance is important, but the best retirement investment is the one that fits your overall financial plan. Use the Bankrate tool below to connect with a financial adviser to build a retirement strategy tailored to your goals:
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
