Reasons I Don’t Use Target Date Funds

The target date fund has often been talked about as a model for harnessing the advantages of index investing and retirement saving without getting bogged down in managing the details of an allocation mix and a glidepath to derisking.

True, investing in target date funds is a decent plan, and we can’t let perfect be the enemy of good enough, but it’s important to understand what you’re giving up — and what you’re paying — when you make the single-fund portfolio choice.

Reasons I Don’t Use Target Date Funds

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We have a complex portfolio because we have four 401(k)s, two Roth IRAs, an HSA, a Defined Benefit Plan, and a taxable account. That doesn’t include 529s, UTMAs, and Roth IRAs for the kids.

Not Available in All Accounts

The idea of choosing an asset allocation based on just one factor—the date you plan to retire—doesn’t necessarily account for your unique ability, need, and desire to take risk.

The Dates Are Misleading

 A lifecycle fund changes my asset allocation automatically. Automatic investing can be a great thing, but I prefer to have more control over my asset allocation.

I Want a Different Glide Path

There is little benefit at all to having more than 10, but there are lots of benefits to having more than three. There are huge benefits to simplicity.

I Want a Different Asset Allocation

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