What is one role of Target Date Funds (TDFs)?

Target Date Funds (TDFs) are designed to simplify retirement investment decisions for participants. These funds automatically adjust their asset allocation over time, becoming more conservative as the target date—typically aligned with the participant's retirement date—approaches. This means that individuals do not need to actively manage their investments or make frequent adjustments based on changing market conditions, which can be complex and time-consuming.

As an individual moves closer to retirement, TDFs gradually shift away from higher-risk investments, such as stocks, to more stable, lower-risk options, like bonds. This helps mitigate potential risks associated with market volatility as the individual near retirement. Thus, the primary role of TDFs is to make the investment process more straightforward and user-friendly, allowing participants to focus on other aspects of their retirement planning without being overwhelmed by the intricacies of asset management.