What It Means
A target-date fund is a mutual fundMutual fundAn SEC-registered fund that pools money from many investors to buy stocks, bonds or other securities, with shares you can sell back to the fund each business day. See more or ETFETFAn exchange-traded fund: a pooled investment fund whose shares trade on stock exchanges throughout the day at market prices. See more built around a year, usually the year its investors expect to retire, and that year appears in its name. Over time it moves its money toward more conservative investments, following a schedule called a glide path. Glide paths differ from one fund company to another, even for funds with the same target year, so two "2055" funds can hold quite different mixes.
Try It: Find Your Retirement Year and Glide Path Type
Put in your age now and the age you plan to retire. The years are counted from 2026.
Reaches its most conservative mix at the year in its name, then generally stays there.
Keeps shifting after the year in its name and generally reaches its most conservative mix later, sometimes well into retirement.
Look for funds named near your year, then read each one's glide path in the prospectus.
How People Say It
- "I'm in the 2055 fund, so I don't really pick anything."
- "It gets more conservative as I get closer to retiring."
- "Is ours a 'to' or a 'through' fund?"
The Breakdown
Formula
Retirement year = this year + (retirement age minus your age now).
Worked example. Maya is 35 in 2026 and plans to retire at 67.
| Step | Figure |
|---|---|
| Retirement age minus age now | 67 minus 35 = 32 years |
| Retirement year | 2026 + 32 = 2058 |
| Funds to look at | Ones with a year near 2058 in the name |
Maya's 401(k)401(k)A retirement plan run through an employer that lets you put part of each paycheck into investments, before tax or as Roth, up to a yearly IRS limit. See more offers two target-date funds near that year from different companies. She reads both glide paths before choosing, because Investor.gov notes funds with the same date can shift to conservative investments at different times and at different speeds.
What the result means. The year tells you roughly which fund fits your timeline. The glide path tells you how that fund gets there. A "to" fund reaches its most conservative mix at the target date. A "through" fund keeps adjusting past the date and generally becomes most conservative after it, which Investor.gov says may be well past age 65.
What moves the result. Retiring earlier or later changes the year. If your risk tolerance is lower or higher than a typical investor your age, a fund with a different year or a different glide path may suit you better.
Good to Know
Investor.gov's bulletin says target-date funds structured as mutual funds and ETFs don't guarantee that you'll have enough retirement income, or any particular level of it, at or after the target date. Like any fund, they can lose money. Read the prospectus for the glide path, whether it's "to" or "through", what the fund holds at the target date, and its expense ratioExpense ratioThe yearly share of a fund's assets used to pay its running costs, so a 0.40% expense ratio costs $40 a year for every $10,000 invested. See more. If you own a target-date fund plus other funds, your overall mix may be different from what the target-date fund alone suggests.
FAQ
How do I pick a target-date fund?
Start with the year you expect to retire, then compare funds with a year close to it. Investor.gov notes funds with the same date can follow different glide paths, so read how each one changes its mix and what it costs.
What's the difference between a "to" and a "through" target-date fund?
A "to" fund reaches its most conservative mix at the date in its name. A "through" fund keeps shifting after that date and generally reaches its most conservative point later.
Is a target-date fund guaranteed?
No. Investor.gov states that target-date mutual funds and ETFs don't guarantee sufficient retirement income, or a specific level of it, at or after the target date.
Do It in Buhata
Countdown, Reminders
Put your target retirement year in Countdown and set a yearly Reminder to reread your fund's glide path and fees.
Open BuhataRelated Terms and Categories
- 401(k)
A retirement plan run through an employer that lets you put part of each paycheck into investments, before tax or as Roth, up to a yearly IRS limit.
- Index fund
A mutual fund or ETF that aims to track the return of a market index, such as the S&P 500, instead of picking investments to beat it.
- Mutual fund
An SEC-registered fund that pools money from many investors to buy stocks, bonds or other securities, with shares you can sell back to the fund each business day.
Sources
Investor.gov (SEC), "Target Date Funds: Investor Bulletin"; FINRA, "Save the Date: Target-Date Funds Explained"
- www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/target-date-funds-investor-bulletin
- www.finra.org/investors/insights/save-date-target-date-funds-explained
Last updated .