Target-date funds simplify retirement investing by automatically adjusting risk over time, making them ideal for those who prefer a hands-off approach. These funds, which held $3.5 trillion by the end of 2023, are often the default option in 401(k) plans, ensuring broad diversification and gradual risk reduction. 

However, high fees can significantly erode long-term returns, making it crucial for investors to choose low-cost options. While effective for wealth accumulation, target-date funds may not serve retirees as well since they lack built-in mechanisms for generating steady income. 

Some newer funds address this gap by incorporating annuities to provide predictable post-retirement income. It’s also important to note how they fit with the existing portfolio to create a coherent investment strategy. 

Finsum: As retirement needs vary, understanding fund structures and choosing the right strategy can greatly impact financial security.