Updated

Updated · Fox Business · Jun 9

Vanguard Says 61% of 401(k) Savers Use Target-Date Funds, Risking Lower Growth and Higher Fees

Updated

Updated · Fox Business · Jun 9

Vanguard Says 61% of 401(k) Savers Use Target-Date Funds, Risking Lower Growth and Higher Fees

Q: What key 'glide path' detail determines if your target date fund will grow with you or stall right at retirement?

The key detail is whether the fund’s glide path is a “to” retirement design or a “through” retirement design. A “to” fund typically reaches its most conservative allocation at the target retirement year and largely stops there. That can protect against volatility, but it can also reduce growth potential too soon, especially since retirement may last 20 to 30 years. In practice, that is the version more likely to feel like it “stalls” at retirement. A “through” fund keeps adjusting after the target date, often for a decade or more into retirement. It usually maintains a higher stock allocation for longer, which gives the portfolio more chance to keep growing as the investor ages. That is the version more likely to “grow with you.” This matters because the main criticism of target date funds is not just simplicity or fees, but that some become too conservative too early. Morningstar has noted that many target date funds have recently become more aggressive and cheaper on average, but the glide path still varies by provider. Two funds with the same retirement year can have very different stock-bond mixes at and after retirement. For investors, the practical test is simple: check the fund’s stock allocation at the target date and whether the glide path continues beyond that date. That tells you whether the fund is designed to preserve assets at retirement or keep balancing growth and risk throughout retirement.

2 articles · Updated · Fox Business · Jun 9

61% of 401(k) participants held target-date funds last year, according to Vanguard’s preview of its latest How America Saves report, underscoring how heavily retirement savers rely on default-style investment options.
Those funds automatically shift toward more conservative allocations as retirement nears, which can simplify investing but also curb growth potential and leave some accounts underfunded.
Higher fees add to the tradeoff, and target-date funds may not reflect assets savers hold outside their 401(k), creating a mismatch between a fund’s glide path and an individual’s broader risk profile.
Low-cost index funds and customized mixes of stock funds can offer broader market exposure with lower expenses, especially for younger workers willing to take a more hands-on approach.
Vanguard’s data highlights a broader retirement challenge: convenience and diversification are driving adoption, but one-size-fits-most portfolios may not match every saver’s goals or income needs in retirement.