Real‑world examples of target date funds in retirement planning

Starting with real examples of target date funds in retirement planning

Before getting into theory, it helps to see how people actually use these funds. Here are several real‑world examples of target date funds in retirement planning that you’ll see over and over in the U.S. market:

• A 30‑year‑old teacher automatically enrolled in her school district’s 403(b) plan, defaulted into a Vanguard Target Retirement 2060 Fund.
• A 52‑year‑old engineer in a Fortune 500 401(k) plan using Fidelity Freedom Index 2035 Fund as his core holding.
• A federal worker in the Thrift Savings Plan (TSP) using the L 2050 Fund as a simple, pre‑mixed portfolio.
• A self‑employed consultant opening a Roth IRA at Schwab and choosing the Schwab Target 2055 Index Fund.
• A near‑retiree rolling an old 401(k) into an IRA and parking it in T. Rowe Price Retirement 2025 Fund to get an actively managed glide path.
• A higher‑income couple using BlackRock LifePath Index 2040 Fund inside a mega‑401(k) plan that only offers institutional share classes.

These examples of target date funds in retirement planning all follow the same basic idea—one ticker symbol, diversified under the hood, and an automatic shift from growth to income as the target year approaches—but the details differ a lot.

How target date funds actually work (using those examples)

A target date fund is built around three moving parts:

• The target year (for example, 2035, 2040, 2060)
• The asset allocation today (how much in stocks vs. bonds vs. cash)
• The glide path (how that mix changes as time passes)

Take the Vanguard Target Retirement 2060 Fund (VTTSX) as an example of a long‑dated fund. For someone around age 30 planning to retire at 65, this fund is heavily tilted toward stocks—typically around 90% global equities and 10% bonds and cash. Vanguard gradually reduces equity exposure over decades, then continues to shift even after 2060, which is called a “through” retirement glide path.

Contrast that with T. Rowe Price Retirement 2025 Fund (TRRHX), an example of a near‑term fund used by investors in their early 60s. Its equity allocation is much lower, often in the 45%–55% range, with the rest in bonds and short‑term reserves. The fund still has growth potential, but the ride is intentionally smoother to reduce the risk of a large drawdown right before or just after retirement.

The federal TSP L Funds are another useful example of target date funds in retirement planning. The L 2050 Fund combines the underlying TSP funds (G, F, C, S, I) in a preset mix that gets more conservative each quarter. Federal workers don’t have to guess at rebalancing rules; they simply pick the L Fund that aligns with their planned retirement window.

Examples of target date funds in retirement planning by provider

Vanguard: Index‑driven, low‑cost examples

Vanguard’s Target Retirement series is one of the best‑known examples of target date funds in retirement planning. A few specific funds you’ll see in 401(k)s and IRAs:

• Vanguard Target Retirement 2050 Fund (VFIFX) – Often used by investors in their mid‑30s. It holds a globally diversified stock portfolio (U.S. plus international) with a small slice in bonds. Expense ratios are low, and the strategy is almost entirely index‑based.
• Vanguard Target Retirement 2030 Fund (VTHRX) – Common for investors in their early 50s. The stock share is lower than 2050, with a growing allocation to U.S. and international bonds.

In many retirement plans, these Vanguard funds are the default investment for new hires. The plan automatically selects the fund with the date closest to the employee’s projected retirement age, which lines up with research from the U.S. Department of Labor on using target date funds as Qualified Default Investment Alternatives (QDIAs) in 401(k) plans (dol.gov).

Fidelity: Active vs. index examples

Fidelity offers two broad flavors that often confuse people:

• Fidelity Freedom Funds – Actively managed target date funds.
• Fidelity Freedom Index Funds – Index‑based versions with lower costs.

A very common example of target date funds in retirement planning is the Fidelity Freedom Index 2040 Fund (FFFFX) in corporate 401(k) plans. It invests in underlying Fidelity index funds tracking U.S. stocks, international stocks, and bonds. For a 40‑year‑old, this fund might be the single largest holding in their retirement account.

Meanwhile, some plans still use the actively managed Fidelity Freedom 2040 Fund (FBFOX). The underlying holdings, fees, and performance profile are different, even though the target year is the same. This is a good reminder that not all examples of target date funds in retirement planning are interchangeable—you need to look under the hood.

TSP L Funds: Government worker examples

For federal employees and members of the uniformed services, the Thrift Savings Plan L Funds are textbook examples of target date funds in retirement planning:

• L 2065, 2060, 2055, 2050, 2045, 2040, 2035, 2030, 2025, and L Income.

Each L Fund is a mix of the core TSP funds:

• G Fund (government securities)
• F Fund (fixed income index)
• C Fund (U.S. large‑cap index)
• S Fund (U.S. small/mid‑cap index)
• I Fund (international index)

The TSP provides detailed allocation and performance data on its site (tsp.gov). For a 28‑year‑old federal worker, the L 2065 Fund is a high‑equity example of a long‑dated target date option. For a 68‑year‑old retiree, L Income is a conservative, income‑oriented example.

Schwab and BlackRock: Institutional and IRA examples

In the IRA world, the Schwab Target Index Funds are common. The Schwab Target 2055 Index Fund (SWYIX), for instance, gives a late‑20s or early‑30s investor a low‑cost, passively managed glide path with broad diversification.

Inside very large 401(k) plans, you’ll often see BlackRock LifePath Index Funds, such as the BlackRock LifePath Index 2040 Fund. These are institutional share classes with very low fees, typically only available through employer plans. For many mid‑career professionals, a LifePath fund is the quiet workhorse of their retirement savings.

When target date funds work well in retirement planning

Looking across these examples of target date funds in retirement planning, patterns emerge around when they tend to work best.

They’re usually a good fit when:

• You want simplicity. One fund that automatically rebalances and adjusts risk over time.
• You’re early or mid‑career and mostly focused on saving consistently rather than fine‑tuning asset allocation.
• Your 401(k) or 403(b) offers a high‑quality, low‑cost series (like Vanguard Target Retirement, Fidelity Freedom Index, TSP L Funds, or similar index‑based products).
• You don’t have a complex financial situation (large taxable accounts, concentrated stock positions, significant pensions, or multiple retirement income streams that need coordination).

For a 35‑year‑old in a typical 401(k) plan, a Fidelity Freedom Index 2055 or Vanguard Target Retirement 2055 fund is often a perfectly reasonable core holding. The key advantage is behavioral: you’re less tempted to tinker with your allocation or sit in cash during volatility.

Research from the Investment Company Institute shows that target date funds have grown to hold trillions of dollars in retirement assets, and participation is especially high among younger workers automatically enrolled in plans (ici.org). That adoption alone is a strong, real‑world example of target date funds in retirement planning doing what they were designed to do: keep people invested.

When a single target date fund may not be enough

The flip side of these success stories is that a target date fund is still a one‑size‑fits‑many product. Even the best examples of target date funds in retirement planning have limitations.

They may be too blunt an instrument if:

• You have substantial assets outside your 401(k). The fund can’t see your taxable brokerage account, rental properties, or other holdings, so your overall allocation might be off.
• You plan an early or late retirement far from the standard 65–67 age assumption. If you’re retiring at 55, a 2050 fund may stay too aggressive for your comfort.
• You have specific income or spending goals in retirement that call for custom bond ladders, guaranteed income products, or tax‑sensitive withdrawal strategies.
• Your plan only offers high‑fee or actively managed target date funds with a mixed track record.

For example, a 60‑year‑old physician with large taxable investments, a defined benefit pension, and real estate might find that a generic 2030 target date fund inside a 401(k) is just one small piece of a much more tailored plan. In that case, the target date fund becomes an example of a convenient building block, not the entire strategy.

How to evaluate examples of target date funds in your own plan

If you’re staring at a long menu of funds, here’s how to compare the examples of target date funds in retirement planning available to you.

Look at fees first

Expense ratios matter. Over a 30‑year career, the difference between a 0.10% and 0.80% annual fee can be tens of thousands of dollars.

Index‑based series like:

• Vanguard Target Retirement
• Fidelity Freedom Index
• Schwab Target Index
• BlackRock LifePath Index
• TSP L Funds

tend to sit on the lower end of the cost spectrum. Actively managed series can be more expensive, and the performance advantage isn’t guaranteed.

Check the glide path

Not all glide paths are equally conservative. Some series keep more in stocks even close to retirement, betting that longer life expectancy and inflation risk justify additional volatility.

For instance, T. Rowe Price Retirement Funds typically maintain a higher equity allocation near the target date compared with more conservative series. That may appeal to investors comfortable with market swings, but it can be stressful if you’re counting down the months to retirement.

Your job is to match the glide path to your own risk tolerance and retirement income flexibility.

Understand the underlying holdings

Two funds with the same target year can hold very different mixes of:

• U.S. vs. international stocks
• Investment‑grade vs. high‑yield bonds
• Inflation‑protected securities (TIPS)

For example, some target date funds include a meaningful slice of TIPS to hedge inflation risk in retirement, while others do not. The TSP L Funds allocate to the F Fund (a U.S. bond index) but do not directly hold TIPS, whereas some Vanguard and BlackRock series do.

Reading the fund’s prospectus or fact sheet is tedious, but it’s the only way to understand what you actually own. Most providers publish these on their sites and on aggregator sites like Morningstar.

2024–2025 trends shaping target date funds

The most recent wave of innovation in target date funds isn’t flashy, but it’s meaningful:

• More index‑based options – Plan sponsors continue shifting from higher‑fee active series to index‑driven target date funds. That’s good news for long‑term investors.
• Greater focus on retirement income – Some providers are experimenting with target date funds that transition into income‑oriented strategies or pair with annuities, trying to address the “what happens after the target date?” problem.
• ESG and custom series – Large employers are working with asset managers to build custom glide paths, sometimes incorporating environmental, social, and governance screens. These are still niche compared with mainstream examples of target date funds in retirement planning but are growing.
• Regulatory scrutiny – U.S. regulators continue to publish guidance on how plan fiduciaries should evaluate target date funds, including fees, glide paths, and fit for the employee population. The Department of Labor’s tips for ERISA plan fiduciaries are a useful reference (dol.gov).

For everyday investors, the bottom line is that the core idea hasn’t changed. The best examples of target date funds in retirement planning are still low‑cost, diversified, and aligned with your age and risk tolerance.

Putting it together: Using examples of target date funds in your own plan

If you’re deciding whether to use a target date fund, start by mapping your situation to the real examples we’ve covered:

• Early‑career employee in a 401(k): A low‑cost, index‑based 2055 or 2060 fund (Vanguard, Fidelity Freedom Index, Schwab, BlackRock LifePath Index) as a single, default holding.
• Mid‑career professional with limited outside assets: A 2035–2045 target date fund as the core of your 401(k), potentially paired with a small satellite position in a specialty fund if you really want it.
• Federal worker: Pick the TSP L Fund closest to your expected retirement window, then adjust one notch more aggressive or conservative if your risk tolerance differs from the default.
• Pre‑retiree with complex finances: Use a 2025 or 2030 target date fund as part of your tax‑advantaged accounts, but coordinate with a broader plan that accounts for pensions, Social Security timing, and taxable investments.

The key is not to treat any single fund as magic. Instead, view these real examples of target date funds in retirement planning as tools—useful, widely tested tools—that can simplify a big chunk of the retirement investing problem so you can focus on saving consistently and planning your actual life in retirement.

FAQ: examples of target date funds in retirement planning

What is an example of a good low‑cost target date fund?
A widely cited example of a low‑cost target date fund is the Vanguard Target Retirement 2050 Fund (VFIFX). It uses index funds under the hood, offers broad global diversification, and typically charges a relatively low expense ratio compared with many active peers. Similar examples include Fidelity Freedom Index and Schwab Target Index funds.

Can you give examples of target date funds used in 401(k) plans?
Yes. In large U.S. 401(k) plans, common examples of target date funds in retirement planning include Vanguard Target Retirement 20XX, Fidelity Freedom Index 20XX, T. Rowe Price Retirement 20XX, and BlackRock LifePath Index 20XX series. Your specific plan might offer only one family, so you’d choose the year that best matches your expected retirement age.

Are target date funds appropriate for retirees, or just for people still working?
Many series are designed to be held through retirement, not just to the target date. For instance, a Vanguard Target Retirement 2020 or TSP L Income fund is an example of a target date fund intended for people already in retirement, with a relatively conservative mix and ongoing rebalancing. Whether that’s appropriate for you depends on your income needs, other assets, and risk tolerance.

What are some examples of target date funds for federal employees?
Federal employees and service members can use the TSP L Funds, which are lifecycle funds functioning as target date funds. Examples include L 2065, L 2060, L 2055, L 2050, L 2045, L 2040, L 2035, L 2030, L 2025, and L Income. Each fund gradually shifts from stocks to bonds and government securities as the target year approaches.

How do I choose between different examples of target date funds with the same year?
If your plan offers multiple 2040 funds, compare their fees, glide paths, and underlying holdings. An index‑based fund with a lower expense ratio is often a strong candidate. Read the fact sheets and, if available, check independent research from organizations like the Investment Company Institute (ici.org) or university finance departments for context on performance and risk. Then choose the fund whose risk level and cost structure align best with your situation.