Advertisement
investing

How Different Target-Date Funds Shift Assets as Retirement Nears

Firms have varying timetables for moving clients’ assets into retirement-income funds.

When you select a target-date retirement fund, you first find one with a name that contains the year closest to the year you plan to retire. The fund will invest your money in a mix of stocks and bonds that becomes more conservative as the target year nears. Eventually, your money is rolled into a retirement-income fund, which holds the final asset mix.

But fund families differ in when they move your money to the income fund. At American Century, assets are moved into the One Choice In Retirement Portfolio (symbol ARTOX) the year the fund hits its target date, a day that portfolio manager Rich Weiss calls "the riskiest in an investor's life." The American Century income fund holds 45% of its assets in stocks, compared with 31% for its average peer. The relatively high stock allotment explains One Choice's category-leading five-year return.

Advertisement - Article continues below

By contrast, Vanguard and Fidelity customers remain in their target-date funds for years after reaching the target date. At Vanguard, clients shift to Target Retirement Income (symbol VTINX) seven years after the target date. Fidelity waits 15 to 20 years before moving its customers to Freedom Index Income, which invests in index funds, or Fidelity Freedom Income, which holds actively managed funds. The Fidelity and Vanguard funds are more conservative than the American Century fund. Vanguard Income holds just 30% of its assets in stocks, and each of the two Fidelity funds holds 24% in stocks.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census
Politics

17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census

Every 10 years, the 435 seats in the House of Representatives are reassigned based on the results of the U.S.
July 2, 2020

Recommended

Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020
10 Stocks to Invest in the Health Care Revolution
healthcare stocks

10 Stocks to Invest in the Health Care Revolution

These companies are fighting disease and improving our standard of care.
July 2, 2020
Cash In With This Gaming ETF
Technology

Cash In With This Gaming ETF

Cash in on the video gaming craze with this fund.
July 1, 2020