Target Retirement Funds

Target retirement funds have names such as Target Retirement 2025 or Freedom Fund 2030. The funds are designed to allocate assets among stocks, international stocks, bonds and cash to provide a mix of investment classes as a fund investor’s retirement age approaches. A target 2025 fund has a higher bond percentage and lower stock percentage than a target 2045 fund. The fund manager adjusts the asset allocations as the target date of the fund approaches.

Considerations

Target retirement funds consist of several index funds from the mutual fund company’s family of mutual funds. For example, the Vanguard Target Retirement 2030 Fund is composed of the company’s Total Stock Market Index Fund, Total Bond Market II Index Fund and Total International Stock Index Fund. The fund manager for the Target Retirement Fund selects the allocation for the three funds based on the years remaining until the fund will be used to provide retirement income, somewhere around the year 2030.

Investor Choices

References

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