A target-date fund turns a retirement portfolio into a single holding that grows more conservative on a schedule tied to the year in its name, so you never have to trade to cut risk. The year on the label says less than it seems, though: two funds dated 2045 can hold different amounts of stock, keep changing for different lengths of time after 2045 and charge fees that differ several times over. This guide lines up three published glide paths, sets out what the funds cost and covers the risks, including what 2008 did to funds dated 2010.
What is a target-date fund?
A target-date fund is a fund of funds that holds stocks and bonds through other funds and moves its mix toward bonds as a chosen year approaches. The year is usually the one in which you expect to retire, so a 2060 fund is meant for someone planning to stop work around 2060, and the three series compared below each offer a fund for every fifth year. The Investment Company Institute counts 98% of target-date mutual funds as investing mainly in other funds.
Behind the single share price, the manager divides the money among US stocks, international stocks, bonds and sometimes inflation-protected Treasuries, rebalances when markets move and follows the glide path as time passes. Some series hold only index funds, others actively managed funds and some a mix of the two, a large part of why their costs differ. Index funds explained covers the index side, and ETFs vs mutual funds vs index funds covers the wrappers.
Inside a 401(k), the fund on your menu may be a collective investment trust rather than a mutual fund. These bank-maintained pools follow the same idea but are not regulated by the SEC, and the Office of the Comptroller of the Currency supervises those run by national banks. With no SEC registration there is no prospectus on EDGAR, so the plan's fact sheet and fee disclosure are where the glide path and costs appear.
How does a glide path work?
A glide path is the fund's preset schedule for shifting from mostly stocks to more bonds, published in its prospectus long before the target year arrives. The early decades look alike across most series: the fund holds almost all stocks while retirement is 30 or more years away, on the view that a long horizon leaves time to recover from bad years.
The descent is where the designs part ways. Vanguard's Target Retirement path holds about 90% in stocks, starts reducing them around age 40, adds short-term inflation-protected Treasuries from about age 60, reaches about 50% stocks at 65 and settles at 30% stocks and 70% bonds around 72. BlackRock's LifePath Index path, as revised in an April 2026 prospectus supplement, holds 99% in equities until about 30 years before retirement and then steps down to 40% at the retirement date, where it stays. T. Rowe Price's Retirement Blend path holds about 98% in stocks early on, reaches a neutral 55% at the target date and keeps reducing stocks for about 30 years after it, and its managers may sit up to 5 points either side of the neutral weight.
The table lines the three paths up by years to the target date. Each cell shows the percentage in stocks, then the percentage in bonds.
| Years to the target date | BlackRock LifePath Index ("to") | Vanguard Target Retirement ("through") | T. Rowe Price Retirement Blend ("through") |
|---|---|---|---|
| 40 years before | 99 / 1 | 92 / 8 | 98 / 2 |
| 30 years before | 99 / 1 | 92 / 8 | 98 / 2 |
| 20 years before | 90 / 10 | 84 / 16 | 93 / 7 |
| 15 years before | 81 / 19 | 76 / 23 | 85 / 15 |
| 10 years before | 71 / 29 | 69 / 31 | 75 / 25 |
| 5 years before | 59 / 41 | 61 / 39 | 63 / 37 |
| At the target date | 40 / 60 | 51 / 49 | 55 / 45 |
| 5 years after | 40 / 60 | 37 / 63 | 50 / 50 |
| 10 years after | 40 / 60 | 31 / 68 | 47 / 53 |
| 20 years after | 40 / 60 | 31 / 68 | 40 / 60 |
Vanguard figures are what each fund actually held on September 30, 2025, when its vintage was the stated distance from its date, and they may not add to 100 because of small cash holdings. T. Rowe Price figures are neutral weights on August 1, 2026, for the vintage nearest each row, which puts most of them about a year closer to the date than the row label; the target-date row uses the 55% the prospectus sets for that point. BlackRock figures are the targets in its April 2026 supplement. All are rounded to whole percentages, and the series are examples, not a ranking.
Two patterns stand out. Before the target date, the three paths sit within about 10 points of one another in every row. At and after the date they split: the "to" path stops at 40% stocks, while the two "through" paths start higher and keep falling, Vanguard's for about 7 years and T. Rowe Price's for about 30. The wider market is more varied still. In its 2010 rule proposal, the SEC reported that stock weights had ranged from about 25% to 65% at the target date and from about 20% to 65% at the landing point.
What is the difference between "to" and "through" glide paths?
A "to" glide path stops changing at the target date, while a "through" glide path keeps shifting toward bonds for years after it. The SEC adds that "to" funds typically turn conservative earlier, so at many points before the date they hold less risk than "through" funds with the same year. The table above shows that this is a tendency, not a rule: BlackRock's "to" path holds more in stocks than Vanguard's "through" path until about 10 years before the date.
The Labor Department frames the difference by the landing point, the moment a fund reaches its most conservative mix: at the target date for a "to" design, years later for a "through" design. FINRA notes that a "through" fund may not land until well past 65, and that no target-date fund is free of risk, even at its date.
Which design fits depends on what happens to the money after the target year. If you expect to take most of it out soon after retiring, for example to buy an annuity or pay off a mortgage, a fund that is already at its most conservative point on that date matches the plan. If the balance will fund withdrawals over 20 or 30 years, a "through" path keeps more in stocks for longer. T. Rowe Price's prospectus says its funds are not designed for a lump-sum redemption at the target date, and Vanguard's describes a fund built for gradual withdrawals after retirement.
Worked example: The same market drop at the target date
Suppose you hold $400,000 in a fund that has just reached its target date, and over the next year stocks fall 30% while bonds are flat.
- At 40% in stocks, like the "to" path above, the fund loses 12%, or $48,000, leaving $352,000.
- At 51% in stocks, it loses 15.3%, or $61,200, leaving $338,800.
- At a 55% neutral weight, it loses 16.5%, or $66,000, leaving $334,000.
The two "through" mixes lose $13,200 to $18,000 more in the bad year. That is the price of keeping more money in stocks for the decades of withdrawals that follow.
How much do target-date funds cost?
In 2025 the middle 80% of target-date mutual funds charged between 0.21% and 1.20% a year, and some index-based series charged less than 0.10%. Those percentiles come from the Investment Company Institute, which also reports an asset-weighted average of 0.27%, against a simple average of 0.64%, a sign that most of the money sits in the cheaper funds.
The SEC points out that fees can be charged twice: once by the target-date fund and again by the funds it holds. The fee table in the prospectus shows both layers. The Labor Department's tips for plan fiduciaries suggest a check that works for individuals too: if the target-date fund costs much more than the underlying funds it holds, ask what services the difference pays for.
The share class can matter as much as the series. These examples come from each fund's own documents.
| Example series and share class | Expense ratio | Other terms in the fund documents |
|---|---|---|
| Vanguard Target Retirement, Investor shares | 0.08% | The same ratio for every vintage in the September 2025 annual report |
| BlackRock LifePath Index, K shares | 0.09% after fee waivers | Waivers run to June 30, 2027; 0.11% to 0.12% before them |
| BlackRock LifePath Index 2040, Investor P shares | 0.39% after waivers, including a 0.25% 12b-1 fee | A sales charge of up to 5.25% of the offering price; sold through insurance-company broker-dealers |
| T. Rowe Price Retirement 2050, Investor Class | 0.62% | $2,500 minimum, or $1,000 for an IRA |
| T. Rowe Price Retirement 2050, institutional class | 0.44% | $500,000 minimum per fund |
| T. Rowe Price Retirement 2050, Advisor and R classes | 0.87% and 1.12% | Include 12b-1 distribution fees of 0.25% and 0.50% |
In a 401(k), you get whichever class the plan chose, so compare the ratio on your plan's fee disclosure, not the cheapest class in the series.
Worked example: What the fee range costs over a career
Assume $400 a month for 35 years, contributed at the end of each month, with a 6% yearly return before costs credited monthly and the expense ratio deducted monthly. Taxes are ignored. You pay in $168,000 in every case.
| Expense ratio | Balance after 35 years |
|---|---|
| 0.08% | $559,487 |
| 0.21% (10th percentile in 2025) | $543,055 |
| 0.57% (median in 2025) | $500,387 |
| 1.20% (90th percentile in 2025) | $434,761 |
The gap between the 10th and 90th percentile funds is $108,294, close to two-thirds of everything contributed. The return assumption is an illustration, not a forecast; the fee gap grows with higher returns and shrinks with lower ones.
Why are target-date funds the default in so many 401(k) plans?
A Labor Department rule lets employers invest a non-choosing worker's money in a target-date fund and limits their liability for how that default performs. The Pension Protection Act of 2006 called for the rule, and the qualified default investment alternative (QDIA) regulation at 29 CFR 2550.404c-5 followed in October 2007.
The rule allows four main kinds of default: a target-date or life-cycle fund, a balanced fund, a professionally managed account, or a capital-preservation product for no more than 120 days. Employers stay responsible for choosing and monitoring the fund prudently; the relief covers the investment results. Workers keep control. The plan must send a notice at least 30 days before the first default investment and before each later plan year, let participants move money out at least once every three months, and impose no transfer fees or restrictions during the first 90 days.
The regulation also says the fund's mix does not have to reflect any one participant's risk tolerance, other investments or preferences. Age, a target retirement date or life expectancy is enough, which is the one-size-fits-all trade-off covered under the risks below.
Defaults are spreading. Section 414A of the tax code, added by SECURE 2.0, requires 401(k) and 403(b) plans established on or after December 29, 2022, the day the law was enacted, to enroll eligible workers automatically for plan years beginning after December 31, 2024. Contributions start at 3% to 10% of pay and rise 1 point a year to at least 10%, and money a worker does not direct goes into a QDIA. The section exempts older plans, SIMPLE 401(k) plans, governmental and church plans, and employers that are under three years old or normally have 10 or fewer employees.
Once in place, defaults tend to stay. In Vanguard's How America Saves 2026, covering the plans it administered at the end of 2025, 96% of plans offered target-date funds, 84% of participants used them and 61% of all participants held a single target-date fund as their entire account, up from 46% in 2016. 401(k) basics covers contributions, matching and vesting.
How do you choose a target-date fund?
Start with the year you expect to stop working, then check the fund's stock weight at that date, when it stops changing and what your share class costs.
Five checks before you pick a vintage
- The glide path chart in the prospectus, or in the plan's fact sheet for a collective trust: the stock share today, at the target date and at the landing point.
- Whether the design is "to" or "through", and whether that matches how you expect to draw the money.
- The expense ratio of the share class you can buy, including the underlying funds.
- What else you own. The SEC suggests weighing other accounts and income sources, such as a pension, before deciding that one fund's mix suits you.
- Whether another year fits better than the one matched to your birth year. An automatic enrollment picks the vintage from your age, and the SEC's example is someone planning to retire in 2060 who picks a 2050 or 2070 fund to take less or more risk.
The fund is designed to be the whole portfolio for one goal, so adding a stock fund beside it, or splitting money across two vintages, changes your overall mix in ways the glide path does not track. Robo-advisors vs DIY investing compares the routes to a custom mix, and asset allocation by age explains the rules of thumb people use to set one.
Where the fund sits matters as well. Inside a 401(k) or IRA, the fund's internal trading has no tax effect. In a taxable account, its interest, dividends and capital gain distributions are taxed every year, even if you never sell a share.
What are the risks of target-date funds?
The biggest risks are that one schedule is applied to everyone with the same birth year, and that the fund can still fall sharply near its date.
- One size fits all. The fund knows your approximate age and nothing else. Two 60-year-olds in the same vintage get the same mix even if one has a pension that covers most expenses and the other will live on the 401(k) alone.
- Same date, different risk. The SEC's 2010 figures put stock weights at the target date anywhere from about 25% to 65%, so the year alone tells you little about how much you can lose.
- Fees and share class. A sales charge or a 12b-1 fee can cost more over time than the convenience is worth.
- Longevity and inflation. A conservative landing mix still has to fund withdrawals that may last 20 years or more, and a bond-heavy portfolio can lose purchasing power. Real returns and inflation explains why a nominal return overstates what the money will buy.
- No guaranteed income. A target-date mutual fund or ETF does not promise any level of retirement income, as the SEC's bulletin stresses.
Losses close to the date are the risk people remember, and 2008 is the clearest recorded case.
Worked example: What 2008 did to funds dated 2010
Take someone two years from retirement with $200,000 in a 2010 fund on January 1, 2008. SEC staff found that 2010 funds lost nearly 24% on average that year, with losses ranging from about 9% to 41%, while the S&P 500 fell about 37%.
| Outcome in 2008 | Loss | Balance at the end of 2008 | Gain needed to get back to $200,000 |
|---|---|---|---|
| Smallest loss, about 9% | $18,000 | $182,000 | 9.9% |
| Average loss, nearly 24% | $48,000 | $152,000 | 31.6% |
| Largest loss, about 41% | $82,000 | $118,000 | 69.5% |
In 2009, 2010 funds returned between about 7% and 31%, about 22% on average. Someone who stayed in an average fund would have ended 2009 with about $185,440, still roughly $14,560 short of the starting balance, with retirement a year away.
After the losses, the SEC and the Labor Department held a joint hearing in June 2009, and in 2010 the SEC proposed making target-date marketing show a fund's mix at its target date. Behavior still matters after the design is fixed. Morningstar's Mind the Gap 2026 found that the average dollar in allocation funds, the category that includes target-date funds, earned 7.8% a year over the decade to 2025, against 8.4% for the funds themselves, because money tends to arrive and leave at the wrong times.
A target-date fund can be the investment side of a retirement plan, but it does not decide how much to withdraw or what to keep in cash. Safe investments for retirees covers the income side, types of investment risk explains the risks a glide path manages and the ones it does not, and the stocks hub puts these funds alongside the other ways to own the market.