What are Target Date Funds?

02/21/2024 Written by: Kristine Simmons

Target Date Funds, also referred to as TDFs are a mix of different types of stocks, bonds and other investments in a single solution. All intended to help you prepare for retirement and structured to maximize your returns by a specific date. Generally, the funds are designed to build gains in the early years by focusing on riskier growth stocks then moving towards more conservative stocks as the target date approaches.1

Target Date Funds target asset allocation over the term of the fund to meet the investor’s objective. Asset allocation is an investment strategy that aims to balance risk and reward by distributing a portfolio’s assets according to the investor’s goals.2

As with anything, there are pros and cons. An advantage to TDFs might be that instead of having to choose several investments, you can choose a single target date fund to match to retirement timeline. However, life changes and what if you retire earlier than the target date or want to continue working past your target date? There is no guarantee that the fund’s earnings will keep up with inflation.



All-in-one asset

Might be more expensive

Diversified portfolio

Income is not guaranteed

An “auto pilot” way to invest

Not flexible – little room to change goals

It’s important to remember that a Target Date Fund is an investment, not an annuity. The funds are subject to risk and underperformance.




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