Target Date Funds
Retirement Investing, Simplified


As its name implies, a target date fund, also known as a lifecycle fund, is an investment that “targets” the approximate year investors expect to retire. Generally, target date funds have the targeted calendar year in the name of the fund, such as Target Date 2030 Fund, Target Date 2040 Fund, and so on. Target date funds strive to make investing simple because all you have to do is put 100 percent of your savings in the fund offered in your retirement plan that’s closest to the year you think you might retire. For example, if you’re 30 years old and you plan to retire in 35 years, you might choose the 2050 Fund, since that is the fund available in your employer’s plan that is closest to the year you plan to retire.


The manager of a target date fund invests in several investments in different asset classes, such as stocks, bonds, etc., with different risk and return expectations. The fund manager’s job is to create a diversified portfolio with an appropriate amount of risk and potential for return, based on your target retirement date.

Keep in mind, just because you select a fund associated with a specific year doesn’t mean you have to retire then or that you will be financially able to retire then. Your choice is just a reasonable estimate of when you might be thinking about leaving the workforce.

Here’s an example

If you’re young, an investment mix with a higher rate of risk may generally be appropriate because you have a long time to grow your savings and recover any loss before you retire. The target date fund closest to your retirement year might contain 70 percent stocks and 30 percent bonds. If you’re closer to retirement, less risk may generally be more appropriate to protect your account balance from large losses, so the fund closest to your retirement year might be 30 percent stocks and 70 percent bonds. 

When you invest in a target date fund, you don’t have to figure out which funds will best grow and protect your savings; it’s all done for you. In addition, the fund’s diversified portfolio helps you avoid being “over-invested” in any single investment option.

Automatically adjusts as you approach retirement

It gets even better. Once you choose your target date fund, you don’t have to make any more investment choices. Each fund automatically adjusts its investment mix—also known as the asset allocation—to more conservative investments as the retirement date nears. The idea is to grow your money while you’re young and time is on your side, then to preserve your savings and investment earnings by incorporating more conservative options into the mix as you approach retirement.


If you were automatically enrolled in your workplace retirement plan, chances are you might already be invested in a target date fund. Because many retirement plans use target date funds as a default investment, you may be automatically invested in one if you haven’t made any investment selections. In that case, it’s important to understand the fund you’re invested in. Depending on your needs, goals and risk tolerance, you may find that you’re better off allocating your savings to other investment options offered in the plan.


Target date funds are a low-maintenance, one-choice option to investing for retirement. They’re designed to simplify investing—especially if you’re not comfortable choosing your own investments or you don’t have time to do the research. And while the investment adjusts automatically as you age, it’s still important to keep an eye on your investments and review them periodically—at least once a year—to make sure they still fit your goals. You’ll also want to understand the investment fees charged for your target date fund compared to the cost of other investments in your employer’s plan.


Whether you’re invested in a target date fund or you selected your own investment mix, make sure to review the investments in your retirement plan account at least once a year to make sure they’re still meeting your needs. If they aren’t, make some adjustments. Your investment professional can help you choose the investments best suited for you.

Log in to your account to view your current investment options.

Or call your Retirement Specialist at 1-800-743-5274 for more information on available investment options in your plan.

Investing involves market risk. Target date funds do not guarantee gains or prevent investment loss.

Generally, target retirement date (lifecycle) investment options are designed to be held beyond the presumed retirement date to offer a continuing investment option for the investor in retirement. The year in the investment option name refers to the approximate year an investor in the option would plan to retire and likely would stop making new contributions to the investment option. However, investors may choose a date other than their presumed retirement date to be more conservative or aggressive depending on their own risk tolerance. Target retirement date (lifecycle) investment options are designed for participants who plan to withdraw the value of their accounts gradually after retirement. Each of these options follows its own asset allocation path (“glide path”) to progressively reduce its equity exposure and become more conservative over time. Options may not reach their most conservative allocation until after their target date. Others may reach their most conservative allocation in their target date year. Investors should consider their own personal risk tolerance, circumstances and financial situation. These options should not be selected solely on a single factor such as age or retirement date. Please consult the prospectus (if applicable) pertaining to the options to determine if their glide path is consistent with your long-term financial plan. Target retirement date investment options’ stated asset allocation may be subject to change. Investments in these options are not guaranteed and you may experience losses, including losses near, at, or after the target date. Additionally, there is no guarantee that the options will provide adequate income at and through retirement.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to see advice from their own tax or legal counsel.

© 2018 Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.  All rights reserved.