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  • Maurice Wilson

Why target date funds miss the mark

Updated: Mar 18

Target date funds work, but they are aimed the wrong way.

In an effort to help investors invest properly for retirement the mutual fund industry created target date funds. Target date funds adjust the risk level in your portfolio down as you get close to your retirement date, thus the term target date. These funds, like annuities, made a lot of sense in the early days of retirement investing, but they are no longer effective.


Advances in health, wellness, and nutrition have made it possible for retirees to spend as many years in retirement as they spent in the workforce. This means a 65 year old retiree may enjoy 30 or more years of retirement. That requires a portfolio that remains positioned for moderate to aggressive growth several years past an investor's retirement date.

"No advisor worth their salt would recommend a conservative portfolio to a 40 something with 20 odd years of investing ahead of her. Neither should they recommend the same for a 60 something retiree with as many years or more of retirement on the horizon."

The target needs to be adjusted

For target date funds to be effective going forward they need to aim higher. The target needs to be more growth in retirement, not less. This requires more risk in the portfolio which brings us to the problem many future and current retirees are facing. How to remain positioned for growth in retirement without risking most or all of their nest egg.

This is a new problem that can't be solved with traditional thinking. Traditional investment portfolios only know how to grow your money by risking more than half your assets in the market. Even a conservative portfolio prescribes risking 60% of your money in stocks. This seems safe until a bear market comes and claws away 20% or more.

This problem of growing your nest egg without placing it in peril can be solved if we allow ourselves to use innovations in investing the way we have in every other aspect of our lives. Our cars, homes, and phones are all "smart" - what about our investment portfolios?

Is there a smart way to invest that meets the growth and safety needs of a multi-decade retirement? Wilson Wealth thinks so. We have created a series of smart portfolios to help reduce stress and increase opportunities for investors to build wealth.

If you are interested in learning how we can help you aim higher for retirement contact us at and put "Smart Portfolio" in the subject line or visit us at

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