What role do target-date funds play in a 401k investment menu?

1 min. readlast update: 03.11.2025

Target-date funds serve as the cornerstone of modern 401k menus, providing automatic diversification and age-appropriate risk adjustment. They function as qualified default investment alternatives for participants who don't make active selections.

These funds automatically shift asset allocation from growth-oriented to more conservative as participants approach retirement age. This "set it and forget it" approach helps overcome participant portfolio choice challenges.

 

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