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"Target Date" Funds in your 401k

"Target Date" Funds in your 401k

January 10, 2024

To anyone who owns, or is considering owning a "Target Date" Mutual Fund or "Lifecycle" Fund in their 401k - versus an all-equity portfolio - please read the following exhaustive long-term study:


Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice

70 Pages Posted: 1 Nov 2023

Aizhan Anarkulova

Emory University - Department of Finance

Scott Cederburg

University of Arizona - Department of Finance

Michael S. O'Doherty

University of Missouri at Columbia - Department of Finance

Date Written: October 2, 2023


We challenge two central tenets of lifecycle investing: (i) investors should diversify across stocks and bonds and (ii) the young should hold more stocks than the old. An even mix of 50% domestic stocks and 50% international stocks held throughout one’s lifetime vastly outperforms age-based, stock-bond strategies in building wealth, supporting retirement consumption, preserving capital, and generating bequests. These findings are based on a lifecycle model that features dynamic processes for labor earnings, Social Security benefits, and mortality and captures the salient time-series and cross-sectional properties of long-horizon asset class returns. Given the sheer magnitude of US retirement savings, we estimate that Americans could realize trillions of dollars in welfare gains by adopting the all-equity strategy.

Keywords: Retirement, retirement savings, target-date funds, survivor bias, easy data bias

JEL Classification: C15, D14, G11, G17, G51

Anarkulova, Aizhan and Cederburg, Scott and O'Doherty, Michael S., Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice (October 2, 2023). Available at SSRN: or