	You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.

advisor
Retirement
7 Best Target Date Funds For Retirement

Advertiser Disclosure Updated: May 1, 2024, 10:37am

7 Best Target Date Funds For Retirement

Barbara FriedbergInvesting Expert Writer

Friedberg is a former investment portfolio manager, university finance instructor and author of three books including "Personal Finance; An Encyclopedia of Modern Money Management." Her work has been featured in national investment publications such as Forbes Advisor, Investopedia, U.S.News and World Report, Yahoo Finance, GoBankingRates and InvestorPlace. She is a regular panelist on the Money Tree Investing Podcast and owns BarbaraFriedbergPersonalFinance.com.

Barbara Friedberg

Barbara FriedbergInvesting Expert Writer

Investing Expert Writer

Michael AdamsLead Editor, Investing

Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.

Reviewed

Michael Adams

Michael AdamsLead Editor, Investing

Lead Editor, Investing

Reviewed

Updated: May 1, 2024, 10:37am

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

Target date funds are designed to simplify retirement investing. When you purchase a target date fund, you get a diversified portfolio of stocks and bonds that gradually adjusts its asset allocation from risky to conservative as you get closer to retirement.

Not all target date funds are created equal. While some funds charge affordable expense ratios, there are more than a few that carry high annual fees equal to one percent or more of your total investment. In addition, they deploy a wide range of investment strategies, particularly as investors get closer to their date of retirement.

To help you navigate these options, Forbes Advisor has analyzed dozens of target date fund families to find affordable options that we consider to be the best for your retirement plan.

Looking For A Financial Advisor?

Get In Touch With A Pre-screened Financial Advisor In 3 Minutes

Find A Financial Advisor

Via Datalign Advisory

Our Guides

Show Summary

Featured Partners

SoFi Automated Investing

None

SoFi Automated Investing

On Sofi's Website

Acorns

$3 to $5

Acorns

On Acorn's Secure Website

Wealthfront

0.25%

$500

Wealthfront

On WealthFront's Website

Best Target Date Funds of May 2024

Vanguard Target Retirement 2060 Fund (VTTSX)

Expense Ratio

0.08%

Number of Component Funds

10-Year Avg. Ann. Return

8.08%

0.08%

8.08%

Editor's Take

As you might expect from the low-cost fund leader, Vanguard Target Retirement Funds are cheap and straightforward. They hold Vanguard broad market stock and bond index funds, which many investors consider the best options available.

Rather than aiming for a single target year for retirement, Vanguard targets a five-year window—2056 to 2060 in the case of VTTSX. This makes the fund appropriate for a more flexible retirement planning strategy.

VTTSX’s portfolio holds Vanguard’s domestic and international total stock market and bond market index funds. Currently the fund has about a 90% allocation to equities and about 10% allotted to fixed income.

Within seven years of the target date, the fund’s allocation is expected to approximate the investment mix of the Vanguard Target Retirement Income Fund (VTINX), which is currently 30% invested in stocks and 70% in bonds.

JPMorgan SmartRetirement Blend 2060 Fund (JAABX)

Expense Ratio

0.29%

Number of Component Funds

Avg. Ann. Return Since Inception (August 2016)

8.67%

0.29%

8.67%

Editor's Take

JPMorgan SmartRetirement Blend Funds build portfolios of both active mutual funds and passive index funds with an eye towards environmental, social and governance (ESG) investment strategies—although it does not describe itself as an ESG fund.

JAABX, the 2060-targeted iteration of the fund family, owns a portfolio of 14 mutual funds plus cash equivalents. It includes well-rounded equity and fixed income options, with both U.S. and international exposure, plus a good range of fixed-income holdings.

The fund’s current allocation is roughly 90% to equity funds and a REIT fund, and the balance to cash equivalents and bond funds. By 2060, the fund’s asset allocation should be around 40% stocks, 55% fixed income and 5% cash. That allocation remains fixed after 2060.

TIAA-CREF Lifecycle Index 2060 Advisor (TVIHX)

Expense Ratio

0.20%

Number of Component Funds

Avg. Ann. Return Since Inception (December 2015)

9.73%

0.20%

9.73%

Editor's Take

TIAA-CREF Lifecycle Index Funds pursue passive investing strategies and hold more compact portfolios than other target date funds on our list. Note that the company also offers the TIAA-CREF Lifecycle Funds family, which uses active management.

The portfolio of TVIHX, the 2060 edition of the Lifecycle Index Funds, consists of three stock funds and a bond fund, plus cash. About 60% of the portfolio is allocated to U.S. stocks. Roughly 33% is allocated to international stocks. The balance is fixed income and cash.

By 2060, TVIHX’s portfolio should be evenly allocated 50% to stocks and 50% to bonds. The fund will continue changing its composition, gradually increasing its fixed income allocation. That is designed to make it a good choice for investors who want to continue holding the fund in retirement, positioned for income generation and low volatility.

Voya Index Solution 2060 Port Z (VSZIX)

Expense Ratio

0.16%

Number of Component Funds

Avg. Ann. Return Since Inception (May 2015)

7.96%

0.16%

7.96%

Editor's Take

Voya Index Solution target date portfolios mostly own Voya-branded, passively managed index funds, plus some third-party exchange-traded funds (ETFs). Note that they avoid real estate and other alternative asset classes, although they may hold some futures contracts.

VSZIX is the 2060 edition of the Voya Index Solution family, and it holds a portfolio of seven stock and fixed-income funds. The portfolio currently has more than 90% of its money at work in stocks, including market-cap weighted funds plus broad-market options. It has more than 5% of its assets allocated to bonds.

This allocation shifts to 40% stocks and 60% bonds by 2060, and it remains fixed after the target date.

T. Rowe Price Retirement 2060 (TRRLX)

Expense Ratio

0.64%

Number of Component Funds

Avg. Ann. Return Since Inception (June 2014)

8.21%

0.64%

8.21%

Editor's Take

T. Rowe Price Retirement Funds are one of the company’s two families of target date funds. (The other is the T. Rowe Price Target Funds). The former takes a more aggressive approach than the latter, owning portfolios of active and passive proprietary T. Rowe Price funds.

Currently, the T. Rowe Price Retirement 2060 fund is allocated well above 90% to stocks and alternative assets, with the tiny remainder to bonds. The portfolio funds are highly ranked by Morningstar, and include more than a few actively managed equity options.

By 2060, TRRLX’s asset allocation will adjust to roughly 55% stocks, with the remainder in fixed income.

State Street Target Retirement 2060 (SSDYX)

Expense Ratio

0.09%

Number of Component Funds

Avg. Ann. Return Since Inception (September 2014)

7.83%

0.09%

7.83%

Editor's Take

State Street Target Retirement Funds are the target date funds from the same firm that manages SPDR ETFs. Not surprisingly, the portfolios of these funds include a mix of proprietary State Street index funds and SPDR ETFs.

The 2060 fund SSDYX currently allocates nearly 40% of the portfolio to a foreign equity index fund, a similar weighting to an S&P 500 index fund and 15% to a small/mid cap equity index fund. The remainder is in fixed income, including long-term and intermediate Treasury ETFs, plus a smidgen of cash. The lack of corporate bond holdings is a distinguishing feature of the current portfolio.

Over time, SSDYX’s fixed-income component broadens to include corporates, high-yield debt and inflation-protected bonds. By 2060, the asset allocation is intended to be more evenly divided between stocks and bonds.

BlackRock LifePath ESG Index 2060 (LEZAX)

Expense Ratio

0.50%

Number of Component Funds

Avg. Ann. Return Since Inception (August 2020)

8.95%

0.50%

8.95%

Editor's Take

BlackRock LifePath Funds are a group of target date funds that pursue an ESG investing strategy. They own portfolios of iShares ETFs that invest in companies that score highly on measures of positive environmental, social and governance impact.

LEZAX has posted decent total returns since its 2020 opening. LEZAX owns 10 funds presently, with about 99% invested in U.S. and international equities plus fixed income.

At the 2060 target date, LEZAK’s asset allocation should adjust to around 40% stocks and 60% bonds, remaining at that balance indefinitely.

*All data is sourced from Morningstar Direct unless noted otherwise and is current as of April 30, 2024. Number of fund holdings sourced from fund websites and spokespeople. Returns since inception through April 30, 2024.

Methodology

Morningstar rates approximately 600 target date retirement funds, although it’s worth noting that this overall group includes funds in the same family with different target date years.

For the purposes of this list, we chose to compare funds with 2060 target dates from fund families that are highly rated by Morningstar and available for purchase by self-directed investors. Some target date funds are only available for purchase in 401(k) plans; we chose to exclude them from this assessment.

As funds of funds, target date funds own mutual funds, index funds and ETFs. They charge an expense ratio, and some also add additional management fees to their gross expense ratio. We screened for funds that offered the lowest possible fees.

With target date funds, investors should closely scrutinize fee structures before investing. Many funds excluded from this list charged additional distribution and service fees—so-called 12b-1 fees—or carried exorbitant expense ratios.

The final list was individually curated to include a balance of actively and passively managed options with a variety of asset allocations. The choices on our list of the best target date funds offer a good range of options suited to individual, self-directed investors.

To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Rates Investing Products.

What Is a Target Date Fund?

Target date funds provide retirement investors with a diversified mix of stocks and bonds that rebalance over time. Also known as lifecycle funds, target date funds gradually shift from more risky stocks to less risky bonds the closer you get to retirement.

Financial professionals encourage younger investors to own more stocks and take on more risk, since they have plenty of time to get additional growth during bull markets and recover from losses incurred during bear markets.

But as they get closer to retirement, investors are encouraged to shift towards less-risky fixed income assets. While bonds don’t benefit as much from growth and price appreciation, they offer better security for your principal and more predictable income.

How Do Target Date Funds Work?

Each target date fund comes with a specific target date—in this assessment, we chose funds targeted to 2060. That means each fund on our list aims to pivot from stocks towards bonds over the next forty years or so.

The strategy for this gradual shift is referred to as the fund’s “glide path.” The glide path is typically described as the gradual percentage change in the allocation of the fund’s portfolio to stocks and bonds.

A 2060 target date fund might be 90% invested in stocks and 10% in bonds today, with the ratio changing by approximately ten percentage points each decade or so—to 80% stocks and 20% bonds ten years from now, and so on.

There are “to” and “through” glide paths. With a “to” glide path, the allocation does not change once the fund reaches its designated target year.

For example, a 2020 target date fund’s allocation might remain fixed as the years march on to 2024, 2025 or even 2030. Meanwhile, a through glide path might keep shifting away from stocks after the target date passes

How Should You Choose a Target Date Fund?

There are a few things to keep in mind to help you choose the right target date fund:

Target date. You should generally choose a fund whose date most closely aligns with the year you plan to retire or start using the money.
Glide path. Even target date funds for the same year can have vastly different glide paths. Make sure you’re comfortable with a fund’s proposed glide path and methodology before you invest.
Fees. As actively managed funds, target date funds can have above-average fees, and every dollar you pay in expenses is money that’s not going towards your retirement.

Disadvantages of Target Date Funds

Many target date funds have disadvantages like high fees and too great an allocation to conservative fixed income assets.

Even among the best target date funds, you can end up paying relatively high expense ratio fees. The steepest annual fee on our list is 0.65% a year, but some of the most expensive funds in the category can weigh in well above 1%. By way of comparison, the very best value ETFs carry expense ratios as low as 0.04%.

While the differences among these fees may seem trivial, they can still have an outsized impact on your retirement. A paper published by the U.S. Department of Labor found that a one percentage point difference in fees and expenses would reduce your account balance at retirement by 28%. That’s not a trivial amount.

An optimal asset allocation is another important consideration with target date funds. One common criticism of target date funds is that they become too bond heavy in the ten to fifteen years ahead of your target retirement date, potentially causing you to lose out on significant equity gains in the process—depending on market performance, of course.

Your final decade of working is when your portfolio is at its highest balance, and compound interest can really get to work for you. If you’re invested in a target date fund carrying 50% or more in bonds at that point, you’ll miss out on growth and have a less abundant retirement because of it.

Target Date Fund FAQs

What are the best target date funds?

We’ve reviewed dozens of target date funds to determine which target date funds are the best for retirement. While no fund is right for everyone, we believe the Fidelity, Vanguard, State Street, American Funds, TIAA-CREF and T. Rowe Price funds listed in this article are among the top tier of target date funds.

How can I estimate what my target date fund will be worth?

It’s nearly impossible to know what your target date fund will be worth in the future because no one can predict how the stock market will perform. Fund managers also have discretion over how often the fund is rebalanced, which will affect long-term returns.

A better question to ask is if you will have enough money to retire. To determine that, you can start with online retirement calculators such as the ones provided by Fidelity, Vanguard and Schwab, but should ultimately meet with a financial professional for a more thorough assessment.

How often do target date funds rebalance?

Target date funds do not specify how frequently they rebalance their allocations. Most prospectuses state that the fund may rebalance or modify the asset allocation “from time to time.”

Next Up In Retirement

Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.

Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

Barbara Friedberg

Investing Expert Writer

Was this article helpful?

The Forbes Advisor editorial team is independent and objective. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. This compensation comes from two main sources. First, we provide paid placements to advertisers to present their offers. The compensation we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market. Second, we also include links to advertisers’ offers in some of our articles; these “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content on Forbes Advisor. While we work hard to provide accurate and up to date information that we think you will find relevant, Forbes Advisor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof. Here is a list of our partners who offer products that we have affiliate links for.

lorem

Are you sure you want to rest your choices?