![]() In contrast, retirement income funds are not necessarily designed to be a retiree’s sole investment choice. ![]() These funds invest in domestic and international stocks and bonds in one fund. Target date funds are designed to offer a single fund solution for retirement planning. Retirement income funds do not change the asset allocation over time. These changes in asset allocation are known as a fund’s glide path. These changes shift the allocation more towards fixed income to reduce the volatility of the portfolio as holders get closer to retirement. Second, target date funds change their allocation as the target date approaches. While this aggressive allocation is ideal for long-term investors, it’s not well suited for retirees. First, target date funds designed for retirement 20 or more years from now typically have a 90% stock and 10% bond asset allocation. This objective defines the important differences between these two types of funds. Generally speaking, target-date funds are constructed around a planned future retirement date, which is most often included in the name of the fund, like the Vanguard Target Retirement 2060 Fund ( VTTSX). ![]() Target-date funds are designed to make investing for retirement as simple as possible.
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