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Target Date Funds: What They Are and How They Work

What exactly is a target date fund and what are they designed to do?

Welcome to 401(k)ompass, a series of two-minute videos to help you manage your 401(k) more effectively by addressing current issues and challenges.

In this episode, our Retirement Education Consultant, Yasemin “Yaz” Hughes, breaks down what target date funds are, how they adjust over time and who they’re best suited for.

Yaz uses the example of a 2065 fund—typically intended for someone early in their career. These funds start out more aggressive, with higher exposure to stocks and other growth assets. As retirement approaches, they automatically shift toward lower-risk investments like bonds and cash equivalents.

It’s a gradual, built-in process that takes the guesswork out of rebalancing.

Target date funds can be a good choice for employees who want broad diversification without needing to make frequent changes to their portfolio.

This quick 2-minute episode will help explain target fund date basics and whether one might be a fit for you or your team.

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