Frequently Asked Questions

New to target date funds (TDFs)?

Here's some information that might help.

What’s a TDF?

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What’s a TDF?

A target date fund is an individual investment portfolio that can be offered through multiple vehicle types and is designed to provide a one-step approach to investing for retirement. As the name suggests, the goal of a target date fund is to grow your savings over a specified period of time with a specific date in mind (your planned, or targeted, year of retirement). Target date funds that invest through retirement continue to invest your savings during the years after the target date. In the years right after retirement, it is important to still protect your savings from significant market declines, and in the later years of retirement, a TDF can help protect your savings from inflation.

There is no guarantee these goals will be achieved. 

How do I know if a TDF might be the right retirement investment for me?

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How do I know if a TDF might be the right retirement investment for me?

Target date funds might be a good option for you if you prefer not to be directly engaged in the daily management of your portfolio but still desire a professionally managed investment strategy that adjusts according to your specified retirement date, year. You select the target retirement date, year that’s right for you and the investment professionals take care of managing your target date fund for you. Target date funds are designed to automatically rebalance their asset allocation over time, becoming more conservative as the target retirement date approaches.

How does a TDF work?

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How does a TDF work?

A target date fund invests in a mix of investments, such as stocks and bonds, that gradually adjusts over time based on your age and years until retirement—two very important factors in investment decisions. As you move along your journey, the mix of investments in each fund, also referred to as the fund’s glidepath or asset allocation, undergoes progressive changes, moving towards a more conservative blend of investments as you approach your targeted retirement date. The target date fund consistently strives to grow your savings with your specific target date in mind.  

What are the most important things to think about when investing for retirement and will a TDF help me?

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What are the most important things to think about when investing for retirement and will a TDF help me?

We believe the top three things that can affect your retirement savings are: 

  1. not saving enough money,
  2. market fluctuations,
  3. the eroding effects of inflation

Target date funds are inherently designed to re-balance over time taking into account your age and retirement date. The dynamic nature of the investment approach attempts to help the fund navigate through varying market conditions and challenges, including inflation. 

How do I pick the right TDF?

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How do I pick the right TDF?

Target date funds investment approach is driven by your age and horizon to retirement. Chose the fund whose name aligns most closely to your desired retirement date.

Can I switch from one TDF to another?

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Can I switch from one TDF to another?

If your time horizon changes, you can switch to a more applicable fund. For example, if you determine that you are going to work for an additional five years, you can move your money into the target date fund that best reflects your new target retirement year. Prior to switching to another target date fund, you need to consider any applicable fees and expenses.

How do I get out of a TDF if I no longer desire to be in it?

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How do I get out of a TDF if I no longer desire to be in it?

You can move your money out of a target date fund to any other investment option within your retirement plan at any time based on plan rules and investment criteria eligibility. Prior to moving out of a target date fund, you need to consider any applicable fees and expenses.

PGIM is the investment management business of Prudential Financial, Inc. (PFI). PFI is the 11th largest investment manager (out of 434 firms surveyed) in terms of worldwide institutional assets under management based on Pensions & Investments’ Top Money Managers list published June 2023. This ranking represents institutional client assets under management by PFI as of December 31, 2022. Participation in the P&I ranking is voluntary and open to managers that have any kind of U.S. institutional tax-exempt AUM. Managers self-report their data via a survey. P&I sends the survey to previously identified managers and to any new managers asking to participate in the survey/ranking. No compensation is required to participate in the ranking.

Risks—Investing involves risk. Some investments have more risk than others. The investment return and principal value will fluctuate, and investors’ shares, when sold, may be worth more or less than the original cost.  Asset allocation and diversification do not assure a profit or protect against loss in declining markets. There is no guarantee a portfolio’s objectives will be achieved.

The target date is the approximate year in which investors plan to retire. The funds are designed for investors who will either withdraw all of their assets upon retirement or who will gradually withdraw assets from the fund over a moderate time period following retirement. Each fund invests in underlying funds that provide exposure to fixed income, equity and non-traditional asset classes. The asset allocation of the target date funds will become more conservative as the target date approaches and for ten years after the target date by lessening the equity exposure and increasing the exposure in fixed income investments.  The principal value of an investment in a target date fund is not guaranteed at any time, including the target date. There is no guarantee that the fund will provide adequate income through retirement.   

A target date portfolio should not be selected solely based on age or retirement date. Before investing, participants should carefully consider the portfolio’s investment objectives, risks, charges and expenses, as well as their age, anticipated retirement date, risk tolerance, other investments owned, and planned withdrawals.   

The stated asset allocation may be subject to change. It is possible to lose money in a target date portfolio, including losses near and following retirement. Investments in the portfolios are not deposits or obligations of any bank and are not insured or guaranteed by any governmental agency or instrumentality. The portfolio offers no assurance that the portfolio will provide adequate income to meet an investor’s retirement or financial goals.  The portfolio’s equity exposure may result in investment volatility that could reduce an investor’s available retirement assets at a time when the investor needs to withdraw funds.