what if you have to retire substantially earlier than the target date or decide you want to keep working longer also there is no guarantee that the fund s earnings will keep up with inflation 
in fact there are no guarantees that the fund will generate a certain amount of income or gains at all a target date fund is an investment not an annuity as with all investments these funds are subject to risk and underperformance furthermore as investments go target date funds can be expensive they are technically a fund of funds fof a fund that invests in other mutual funds or exchange traded funds which means you have to pay the expense ratios of those underlying assets as well as the fees of the target date fund of course an increasing number of funds are no load and overall fee rates have been decreasing still it is something to watch out for especially if your fund invests in a lot of passively managed vehicles why pay double fees on index funds when you could buy and hold them on your own also it s worth bearing in mind that similarly named target date funds are not the same or more specifically their assets are not the same yes all 2045 target date funds will be heavily weighted toward equities but some might opt for domestic stocks while others look to international stocks some might go for investment grade bonds and others choose high yield lower grade debt instruments make sure the fund s portfolio of assets fits your comfort level and own appetite for risk the ultimate autopilot way to investall in one vehicle no need for other assetsa diversified portfoliohigher expenses than other passive investmentsincome not guaranteedpossibly insufficient inflation hedgelittle room for changing investor goals needsexample of target date fundsvanguard is one investment manager offering a comprehensive series of target date funds below we compare the characteristics of the vanguard 2065 vlxvx fund to the characteristics of the vanguard 2025 fund vttvx the vanguard target retirement 2065 fund vlxvx has an expense ratio of 0 08 as of may 31 2024 the portfolio allocation was 89 49 in stocks 9 61 in bonds and 0 90 in short term reserves it holds other vanguard mutual funds to achieve its goals 2it had 54 invested in the vanguard total stock market index fund 36 30 invested in the vanguard total international stock index fund 6 70 invested in the vanguard total bond market ii index fund and 3 invested in the vanguard total international bond ii index fund 2expense ratios eat away at returns passively managed funds will have lower expense ratios than actively managed ones when choosing funds try to align your return goals with your risk tolerance and expenses the vanguard target retirement 2025 fund vttvx has an expense ratio of 0 08 because it matures much sooner than the 2065 fund it is more conservative as of may 31 2024 its portfolio is weighted 52 02 in stocks 47 08 in bonds and 0 90 in short term reserves 3it has allocated 31 50 of assets to the vanguard total stock market index fund 28 80 to the vanguard total bond market ii index fund 21 10 to the vanguard total international stock index fund 12 40 to the vanguard total international bond ii index fund and 6 20 to the vanguard short term inflation protected securities index fund 3both funds invest in almost all the same assets however the 2065 fund is more heavily weighted toward stocks with a relatively smaller percentage of bonds and cash equivalents the 2025 fund has greater weight in fixed income and fewer stocks so it is less volatile and more likely to contain the assets the investor needs to begin making withdrawals in 2025 23can i hold onto a target date fund after the target date yes however it may behave differently depending on the type of target date fund you have a through fund will continue adjusting its asset allocation toward more conservative holdings as time passes a to fund will retain its final asset allocation as of its maturation date indefinitely 