[Alyssa]

I’ll be 40 this year, and my 401k is in a target date fund. Is it too late for me to course correct??

considering adjusting my 401(k) to invest in a target-date fund. Is it too late to make this move, or could it still benefit my long-term retirement goals?

Would love to hear your thoughts and experiences!

[Frank]

No. In fact, you could start from zero at 40.
So, you are actually quite early in recognizing that TDFs are a mistake that are just designed to be cover-your-ass creations of the financial services industry.

Just leave that crap behind. No worries.

[Jeremy]

Target date funds aren’t terrible options, so you really haven’t fallen behind much.

[Eric]

Zero context. Is it an appropriate asset allocation for your risk tolerance, time horizon, goals?

[Ryan]

I turned 40 last year and moved my target fund to:
25% large cap
25% mid cap
25% small cap

25% international
All very low cost index funds. It’s never too late to reallocate.

[Kent]

If your plan is to dump target date funds and go 100% stock, it’s probably the wrong time for that.

Stocks are currently at nosebleed valuations — by any measure.

2025 is likely the wrong time to ramp up risk.

[Kenny]

If you’re investing in retirement at 40, you’re doing better than quite a few people! Just keep getting 1% better every day.

[Bill]

if you are able to post which specific Target Date fund you’re in – and what your other 401K investment options are – you may get more detailed assessment from folks on here.

But the short answer is no, it is not too late.

You certainly have the flexibility to reallocate existing and future contributions inside your 401K without any tax consequence.

Main goal is determining your risk tolerance based on how long you still plan to accumulate assets before starting to access those funds in retirement.

[Amar]

Nothing wrong with that, good job for participating in your future. That’s the biggest factor

[Dwayne]

You are fine. At your age a target date fund would be almost all in the stock market. They don’t start to get more conservative until you are 50.

The fees may be high but still plenty of time for you to switch to cheaper options.

The most important thing is that you are investing.

[Taylor]

What’s wrong with a target date? That’s how mine is set up because I’m not knowledgeable enough to put it anywhere else.

Where should it be instead? I’m 29

[Matt]

The nice thing about tax-advantaged accounts is you can change them without taxable events.

[Johnny]

You’re doooooomed!! Jk. You can sell and reallocate the money in your 401k to whatever you have access to in your company plan without taxes or penalty.

[Prasad]

I switched from target 2045 fund to 100% stocks only in the last couple of years (at 45 years old).

Which company target date fund are you in? Vanguard? What’s its expense ratio?

If you are 40, hopefully it’s in target 2050 fund, which would be 80% or more in stocks, so it’s not too bad.

You can just switch all of it over to S&P 500 on Monday, or transfer 10% a month over the next 10 months, or some such gradual move, whatever you feel comfortable doing.

[Amir]

Depends on when you want to retire and how much asset you have, target date “mutual” funds are good option for 401k

[RP]

It depends a lot on what your 401k options are. Which company is managing the target date funds there?

If it’s Vanguard, Fidelity Freedom Index, Schwab Target Index, or any provider with an expense ratio of less than 30 basis points (0.30%), then it’s worth keeping assuming you picked the year closest to your intended date of retirement.

If it’s an insurance company with an expense ratio greater than 50 basis points, then it might be worth putting the money in one or more stock index fund options with lower expense ratios.

It’s impossible for anyone to give you the most appropriate answer for managing your 401k without seeing all the investment options and expense ratios for each.

[Rebecca]

Target date funds automatically rebalance to lesser risk the closer to the date you get. They aren’t inherently bad, and they still promote growth.

I’m about the same age as you, and my target date has averaged 10%+. I can’t complain about that.

I don’t have 100% of my funds in there anymore, but in my younger years, it was a good way to set and forget!

[Kris]

There’s nothing wrong with a target date fund. What are the fees and does it match your risk tolerance?

[Joni]

I’m currently reading The Simple Path to Wealth, and he says target funds aren’t the worst as long as they have low fees and are aggressive in the accumulation stage.

I just reallocate all of my 401k funds to simplify them. I opted for the closest to the S&P 500, which wasn’t easy to find!

It wasn’t hard to change funds but I had to do it twice. Once for my current portfolio and again for my incoming contributions.

[Lakisha]

I feel your pain! I let a Fidelity “advisor” talk me into moving my entire plan into a target day fund. I felt uneasy about it and changed it a few days after the call.

The little bit I left in the fund is not growing, while everything else is growing at 18-24%.

[Author]

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