Are target-date funds the right retirement savings vehicle for you?

These all-in-one solutions take care of your asset allocation needs, but there are caveats.

Jeffrey Bunce, CFA 21 September, 2015 | 5:00PM

Note: This article is part of Morningstar's September 2015 The road to retirement special report.

Investors taking their first steps on the road that will eventually lead to retirement have myriad choices at their disposal. One increasingly popular form of saving for retirement is investing in target-date funds. Indeed, many employers now offer target-date funds as an option within defined contribution plans and further, many plans are using them as the default option when employees enroll. Gaining a better understanding of this retirement option will help you decide if it can help you reach your retirement goals.

The growth and appeal of target-date funds is easy to understand. These professionally managed funds represent an all-in-one, diversified mix of stocks and bonds, the asset allocation and overall portfolio risk of which evolves over time as the fund's "target-date" approaches.

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About Author

Jeffrey Bunce, CFA

Jeffrey Bunce, CFA  Jeffrey Bunce, CFA, is a senior investment analyst for Morningstar’s Investment Management group.

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