Investors hold $4.8 trillion in these retirement funds—how to choose one for yourself

In 2025, target-date funds continued on the track of three trends investors can be relatively pleased about.

For one, they’ve gotten bigger. The total amount of investor money in these funds reached $4.8 trillion in 2025, largely thanks to another year of stock and bond market gains, according to a report published earlier this month by investment research firm Morningstar. As a group, target-date funds have grown by 11.9% annually over the last half-decade.

They’ve also gotten cheaper. On average, the funds charged an annual expense ratio of 0.27% in 2025, according to the report — down from 0.29% the year before and 0.55% in 2015.

Finally, these funds have become more aggressive, with more funds, on average, exposing their investors to higher allocations of stocks for longer, Morningstar reports. The asset mix that’s appropriate for you depends on your tolerance for risk, but generally, portfolios with higher stock allocations have tended to outperform those tilted toward bonds over the long term.

With target-date funds, the long term is key. These investments are designed to be all-in-one portfolios, funds that you hold from when you first start investing through retirement. And over the course of the decades you’re likely to be invested in one of these funds, factors such as fees, performance and investment mix can make a huge difference, experts say.

“A lot of people don’t go any further than looking at the name of the fund,” says Larry Luxenberg, a certified financial planner with Lexington Avenue Capital Management. “Target-date funds are made to be simple, but there’s still work you should do to make sure it’s right for you.”

Target-date funds are designed to be dynamic portfolios that age along with you. The idea is, you choose a fund with a date in the name that corresponds, roughly, to the year you hope to retire. The fund holds a mix of stocks, bonds and cash that grows more conservative as you age.

When you’re young and hoping to accumulate money, the portfolio is tilted toward fast-growing stocks. When you get older and want to protect your savings, the portfolio shifts toward less volatile bonds and cash.

No two target-date funds are exactly the same. Funds from different families hold different mixes of assets that change differently over time. They’ll also charge different fees.

If you hold a target-date fund in a workplace plan, such as a 401(k), you may only have one fund family to choose from. Even then, it may be worth looking under the hood and examining the portfolio with a financial professional, experts say. In general, it’s a good idea to speak with a financial professional before making any changes to your portfolio.

But if you invest through an individual retirement account or brokerage account, it pays to be especially vigilant, since you can invest in virtually any fund. Here are three factors financial pros say to pay attention to, beyond just the year you hope to retire.

1. Underlying investments

Target-date funds are so-called “funds of funds.” That means, within your target-date fund is a roster of mutual funds that make up the ultimate portfolio. At a very high level, it’s important to know what kind of funds those are so you can know exactly what you’re paying for says Joon Um, a CFP with financial firm Secure Tax & Accounting.

“Some use low-cost index funds while others are more actively managed,” he says.

It’s also smart to familiarize yourself with the different “flavors” of stocks and bonds the portfolio holds and make sure you’re comfortable with the amount of each you’re invested in at the time you’re buying, says Crystal Cox, a CFP and senior vice president with Wealthspire Advisors.

“What is the split between stock and bonds? Is it 60-40? 70-30? You have to ask yourself what’s appropriate for you,” she says. “Same with U.S. and international [stocks], and so on and so forth.”

Generally, you can find a breakdown of what a fund holds by downloading the prospectus from the fund company website or by searching the fund on investment research sites such as Morningstar.

2. ‘Glide path’

Remember, the portfolio mix will change from the time you buy the fund to — and in some cases through — the year you plan to retire. That planned shift to the fund’s asset mix is known as its “glide path” and you can typically find it represented as a graph in any target-date fund’s prospectus.

The most “aggressive” funds will hold higher percentages of stock for longer while “conservative” funds tend to gravitate toward bonds.

While many glide paths look similar, there can be a big difference from fund to fund. At the beginning of the path — when when the portfolio is decades away from the date in the fund’s name and will be at its most aggressive — many funds hold upward of 90% of the portfolio in stocks, according to Morningstar’s 2026 target-date fund landscape report. But some more staid funds hold closer to 50%.

How you want your portfolio to behave over time will come down to how comfortable you are with market volatility and how you plan to use your money in retirement — both subjects worth discussing with a professional, says Erika Safran, a CFP with Safran Wealth Advisors.

“It’s a matter of, how much risk do I want to take, and how much risk do I need to take,” she says.  

3. Expenses

When choosing a target-date fund — or a mutual fund of any kind — it’s important to pay attention to its expense ratio, the annual fee charged by the fund company for managing the portfolio, says Bill Shafransky, a CFP with Moneco Advisors. It’s likely even more important than hunting for the funds that have historically earned the highest returns, he says.

“Don’t get me wrong, looking at historical performance is great, but there’s a big difference in how much of that return you get to keep when comparing funds at a 0.68% expense ratio versus a 0.35% expense ratio,” he says.

On average, target-date funds come with an expense ratio of 0.27%, according to Morningstar.

So, just how much of a difference does it make? Imagine an investor who puts $5,000 into a target-date fund and invests another $5,000 a year for 40 years, earning an 8% annualized return. If that investor chose a fund with an expense ratio of 0.35%, they’d end up with $1.37 million, having paid about $140,000 in fees, according to NerdWallet’s mutual fund fee calculator.

Had that same investor paid 0.68% a year in expenses, they’d have about $1.25 million, with $260,000 in fees.

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