Target-date fund
A single fund that holds a mix of investments and gradually shifts that mix toward more conservative holdings as a target year approaches.
A target-date fund is a single fund holding a diversified mix of stocks and bonds, packaged around a target year — usually a rough retirement date. The mix is more growth-oriented in the years far from the date and shifts gradually toward more conservative holdings as the date approaches. This shifting mix is called a glide path, and the fund does the rebalancing automatically.
Two target-date funds with the same year in their names can hold quite different mixes, apply different glide paths, and charge different expense ratios. "2055" is not a standardized recipe. The fund's fact sheet and prospectus spell out the actual mix, the glide path, and the fee.
These funds are commonly offered as a default option inside 401(k) plans. The appeal is simplicity — one holding, automatic rebalancing, a mix that adjusts with time. The tradeoff is fit: whatever the fund decides is right for someone retiring in a given year may not match any particular person's situation, tax picture, or risk preference.
Plumb is financial education, not financial, investment, tax, or legal advice.