Vanguard Target Retirement funds follow a glide path that holds about 90% equity for young savers, eases to roughly 50% equity at the target retirement year, then keeps declining to a final 30% equity and 70% bonds about seven years into retirement, where it holds. This is a "through retirement" design, not a "to retirement" one.
Key takeaways
- The glide path starts near 90% stocks / 10% bonds and lands at 30% stocks / 70% bonds, per Vanguard's published methodology.
- The 50% equity mark hits at the target date (roughly age 65), then equity keeps falling for about seven more years to the 30% floor around age 72.
- It glides through retirement rather than stopping at it, on the logic that your risk needs do not reset the day you stop working.
- Each fund holds four index funds: Total Stock Market, Total International Stock, Total Bond Market II, and Total International Bond II.
- Investor Shares cost 0.08% a year, well under the industry average for target-date funds.
- For FIRE and high-net-worth investors, the 30% equity floor and the pace of de-risking are the parts worth scrutinizing.
How the glide path shifts with age
A target-date fund automates one job: it lowers your stock exposure as retirement nears so a bad market year matters less when you have less time to recover. The "glide path" is the schedule that governs that shift.
Vanguard keeps equity high and flat early, then de-risks steadily as the target year approaches, and continues trimming stocks into the first years of retirement. The table below shows the approximate equity allocation at each stage, based on Vanguard's glide-path construction.
| Stage (years to / from retirement) | Approx. age | Equity | Bonds |
|---|---|---|---|
| 40+ years to retirement | 25 | ~90% | ~10% |
| 25 years to retirement | 40 | ~90% | ~10% |
| 20 years to retirement | 45 | ~83% | ~17% |
| 10 years to retirement | 55 | ~70% | ~30% |
| 5 years to retirement | 60 | ~60% | ~40% |
| At target date (retirement) | 65 | ~50% | ~50% |
| 5 years into retirement | 70 | ~40% | ~60% |
| 7 years into retirement (final) | 72 | ~30% | ~70% |
Equity stays near 90% until roughly 25 years out, then declines on a steady slope. At the target year the split is about 50/50. From there the fund keeps de-risking to a 30% equity landing point around age 72, then holds that mix and merges into Vanguard Target Retirement Income. Treat the percentages as approximate anchor points; Vanguard rebalances continuously and revisits the methodology periodically.
"Through" versus "to" retirement
Providers split into two camps. A "to retirement" glide path reaches its most conservative allocation on the target date and stops moving. A "through retirement" path, which is Vanguard's approach, keeps lowering equity for several years past the target date before settling.
The reasoning is that retirement is not a cliff. Someone retiring at 65 may draw on the portfolio for 25 or 30 years, so holding 50% equity at the target date and easing down afterward keeps more growth working against longevity risk. The trade-off is that a "through" investor carries more equity, and more sequence-of-returns risk, in the early retirement years than a "to" investor would.
What sits inside the fund
Every Vanguard Target Retirement fund is a wrapper around four broad index funds:
- Vanguard Total Stock Market Index Fund (US equity)
- Vanguard Total International Stock Index Fund (non-US equity)
- Vanguard Total Bond Market II Index Fund (US bonds)
- Vanguard Total International Bond II Index Fund (non-US bonds, currency-hedged)
Roughly 60% of the equity sleeve is US and 40% international; the bond sleeve splits on similar lines. You are buying thousands of stocks and bonds worldwide in one ticker, rebalanced for you. If you would rather hold the pieces directly, the same building blocks are available as low-cost funds and ETFs; see Admiral Shares versus ETFs for how the share classes compare.
The fee
Vanguard Target Retirement Investor Shares carry an expense ratio of 0.08% a year, or $8 per $10,000 invested. That is a fraction of the target-date category average and one of the main reasons these funds are a default choice in so many 401(k) plans. There is no separate management or advice fee layered on top; the 0.08% is the all-in cost of the underlying funds.
Low as that is, it is not free relative to building the portfolio yourself. Holding the four underlying index funds directly can shave a basis point or two off the blended cost. For most savers the gap is not worth the extra maintenance. For a large taxable account the math changes, which brings up the bigger issue for this audience.
The FIRE and high-net-worth critique
Target-date funds are built for the median retiree who stops working around 65 and needs the balance to last. FIRE investors and high-net-worth households often do not fit that profile, and three things tend to grate.
The equity floor may be too low. A 30% equity landing point suits someone drawing down heavily on a portfolio that has to last 25 years. Someone retiring at 45 with a 50-plus-year horizon, or a wealthy household spending well under a safe withdrawal rate, can usually carry far more equity. A higher stock allocation historically supports a higher sustainable withdrawal rate and leaves more for heirs. The fund's default de-risking can work against both goals. Mapping your own number first helps; our saving and investment plan guide walks through the withdrawal-rate math.
The de-risking starts on someone else's clock. The glide path keys off a calendar year, not your actual assets or spending. If you are financially independent a decade early, a fund named for your "retirement" year is still de-risking as if you were a traditional retiree, dragging on growth you do not need to give up yet.
Tax location is clumsy in a taxable account. A target-date fund holds bonds inside the same wrapper as stocks, so in a taxable brokerage account you take bond interest as ordinary income with no way to place those bonds in a tax-sheltered account instead. Above the 401(k) and IRA level, holding the components separately lets you put bonds in tax-deferred space and equities where they are taxed most gently.
None of this makes the funds bad. They are an excellent default, and the 0.08% cost and hands-off rebalancing are hard to beat inside a workplace plan. The point is that "default" and "optimal for a FIRE household" are not the same thing. If you want more equity than the glide path allows, the common moves are to pick a fund dated later than your actual retirement, hold it alongside a separate stock fund to lift the blended allocation, or skip the wrapper and run the underlying index funds at a fixed allocation you control.
For the wider lineup and where these funds fit, see the Vanguard fund hub and our retirement planning guides.
Frequently asked questions
What is the final stock and bond allocation of a Vanguard Target Retirement fund?
The glide path lands at about 30 percent stocks and 70 percent bonds, reached roughly seven years into retirement around age 72. From there it holds that mix and merges into Vanguard Target Retirement Income. The path starts near 90 percent stocks and 10 percent bonds for young savers decades from retirement.
What is the difference between a through-retirement and a to-retirement glide path?
A to-retirement glide path reaches its most conservative allocation on the target date and stops moving, while a through-retirement path, which is Vanguard's approach, keeps lowering equity for several years past the target date before settling. Vanguard holds about 50 percent equity at the target year, then eases down to 30 percent by age 72.
Which underlying funds are inside a Vanguard Target Retirement fund?
Each fund holds four broad index funds: Vanguard Total Stock Market, Total International Stock, Total Bond Market II, and Total International Bond II. Roughly 60 percent of the equity sleeve is US and 40 percent international, and the bond sleeve splits on similar lines, giving you thousands of stocks and bonds worldwide in one ticker.
Why might a target-date fund be a poor fit inside a taxable account?
A target-date fund holds bonds in the same wrapper as stocks, so in a taxable brokerage account you take bond interest as ordinary income with no way to place those bonds in a tax-sheltered account. Above the 401(k) and IRA level, holding the components separately lets you put bonds in tax-deferred space and equities where they are taxed most gently.
Why do early retirees sometimes pick a fund dated later than their retirement year?
The glide path keys off a calendar year, not your actual assets or spending, so a fund named for your retirement year keeps de-risking as if you were a traditional retiree. Someone financially independent a decade early who wants more equity can pick a later-dated fund, hold a separate stock fund alongside it, or run the underlying index funds at a fixed allocation.