Educational information, not individual financial advice.
Key Takeaways
A glide path is a planned change in your asset allocation over time — typically starting aggressive when you're young and gradually shifting toward conservative as retirement approaches. The idea is to match risk to time horizon automatically, without requiring constant decisions from the investor.
A 25-year-old has 40 years until retirement. Market volatility is effectively noise on that horizon — a 40% drawdown in 2025 has essentially no effect on their 2065 outcome if they keep saving. Aggressive allocation captures compound growth at its peak.
A 65-year-old is different. They're spending from the portfolio now. A 40% drawdown in their first retirement year can permanently impair the plan (sequence-of-returns risk). Lower volatility is worth accepting lower expected return.
The transition between those two states should happen gradually, not as a sudden flip at some arbitrary age. Glide paths formalize the gradual shift.
A target-date fund is a single mutual fund (or ETF) that implements a glide path automatically. You pick the fund labeled with your approximate retirement year ("Target 2055 Fund") and the fund manager handles the allocation shifts internally.
A typical target-date series might hold:
Target-date funds dominate 401(k) plans as default options. Their expense ratios vary widely — some providers offer them at 0.08%, while others charge 0.75%+. Check before using.
"To" retirement glide paths stop shifting allocation at the target date. A "to 2040" fund reaches its end allocation in 2040 and stays there.
"Through" retirement glide paths continue shifting to even more conservative allocations for 10–30 years past the target date. A "through 2040" fund might continue de-risking until 2070.
The choice matters more than it sounds. "Through" paths preserve equity exposure longer into retirement — historically good for long-lived retirees, since spending horizons of 30+ years actually favor some equity. "To" paths hit a conservative target and hold, which is simpler but can underperform in late retirement.
Glide paths have been criticized on a few fronts:
You don't need a target-date fund to use a glide path. In Horizons, your allocation schedule can include transition milestones — for example:
This accomplishes the same thing as a target-date fund with more granular control.
The allocation schedule on each asset lets you specify strategy transitions at specific months. The engine follows the schedule month by month, so your Monte Carlo simulation accurately reflects the reducing volatility as you age. The retirement readiness analyzer takes this into account when projecting portfolio survival.
Try this next
Asset Allocation
More related reading