Asset allocation

The Boost: Are target-date funds right for you?

If you have a 401(k), chances are you’ve seen something called a target-date fund. Unfortunately, many 401(k) plans use vague language to describe how they work. Choosing one, if any, can have an important impact on your returns and ultimately your retirement. Are target-date funds right for you?

🧠 What you need to know

Target date funds are a type of passive fund designed to automatically shift from more aggressive investments (stocks) towards more conservative investments (bonds) as you approach a specified retirement date, or the "target date". They help to automate setting and rebalancing a portfolio, in some ways similar to a robo advisor. These are some of Vanguard’s target-date options:

For example, Vanguard’s Target Retirement 2070 fund starts with a 90% allocation to stocks and 10% to bonds. You can trade Target date funds in most brokerages and they typically are labeled with a year in the future (2035, 2045, 2055, etc...), which corresponds to an anticipated retirement date. Here are some advantages and disadvantages of using target-date funds:


  • Simplicity: Target date funds offer a set-it-and-forget-it approach, making retirement planning much easier.
  • Automatic rebalancing: These funds adjust their asset allocation over time, moving from aggressive to conservative investments as the target date approaches in order to reduce the risk of losing your capital when you need it for retirement.
  • Diversification: Investors gain exposure to a broad mix of assets within a single fund.


  • One-size-fits-all: Fund options may not match your personal risk tolerance or retirement goals. You may desire a more aggressive investment stance all the way through retirement.
  • Performance: A preset allocation and automatic rebalancing could mean lower performance than a more aggressive stance. For example, the Vanguard Target Retirement 2070 returned approximately 20% in 2023 while the S&P 500 returned approximately 26%. The difference is mostly due to the target-date funds’ allocation to international stocks and bonds.
  • Costs: Target date funds can carry higher fees than if you managed a similar portfolio yourself. As a simple comparison, the Vanguard Target Retirement 2070 carries an annual fee of $8 for for every $10,000 invested, while the Vanguard S&P 500 ETF (VOO) charges $3.

🤝 How can Mezzi help?

If you prefer a set it and forget approach, target-date funds may be a great option. However, if you choose to pick individual investments on your own or prefer a mix of target date funds and other investments, then Mezzi can help you:

  • Manage retirement and taxable accounts
  • Maintain allocations across accounts
  • Compare performance across accounts and assets
  • Save on taxes
  • Reduce fund fees