Target-date funds may not be equipped to handle many decisions retirees face after leaving the workforce.
These investment vehicles, designed to automatically shift toward more conservative allocations as investors approach retirement, typically complete that transition around the target retirement date. But that's where their role often ends.
Once you've retired, target-date funds can become a liability rather than an asset, financial advisors say. They were built primarily to get you to retirement, not to sustain you through it.
Retirees often need to make complex decisions about withdrawals, tax efficiency, income generation and required minimum distributions that target-date funds don't address. The funds also may not align with individual circumstances, health situations or longevity expectations.
Experts recommend reviewing your target-date fund's allocation after you retire and considering whether to transition to a more customized portfolio that addresses your specific retirement needs.
