Target Date Solutions Overview

With 40 years of defined contribution (DC) experience, we have gained valuable insights from the behavior, preferences, and investment tendencies of our almost 2 million participants.* This experience has helped to inform how we manage our target date solutions.

Two choices that align with specific client needs

Recognizing that sponsors have different needs and that those needs have changed over time, T. Rowe Price has continually enhanced its target date offerings. As the DC industry continues to evolve, we have found that sponsors usually have two primary investment objectives for their plan:

  • Providing participants with adequate lifetime income to sustain a potentially lengthy (25- to 30-year) retirement.
  • Moderating market volatility and reducing the risk of capital loss at or near the target retirement date.

We now offer two target date products—Retirement Funds and Target Retirement Funds—to give sponsors the ability to select the one that best aligns with their plan’s needs.

How they are different

The primary difference between the Retirement Funds and Target Retirement Funds is the equity allocation along the glide path. This manifests itself in defining the following attributes:

How they are similar
  • Both offer one-step investment solutions for participants and help them maintain an appropriate asset allocation throughout their lives.
  • One investment management team oversees both investment solutions.
  • Glide path designs reflect our proprietary asset allocation modeling and research, and they continue to shift for 30 years after the target date.
  • Material equity allocations are maintained to address the risk of outliving retirement assets.
  • Tactical allocations are employed to incorporate our market outlook.
  • Identical underlying funds are diversified across the same asset classes and the same sector representation.
  • Glide Path Design

    Our two target date investment options differ in equity allocations.

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  • Investment Framework

    Consistent investment philosophy and management expertise.

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  • How to Choose

    Plan objectives and investment risk priorities should drive the decision.

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The principal value of the Retirement Funds and Target Retirement Funds (collectively, the “target date funds”) is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The target date funds’ allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The Retirement Funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term retirement withdrawal horizon. The Target Retirement Funds emphasize asset accumulation prior to retirement, balance the need for reduced market risk and income as retirement approaches, and focus on supporting an income stream over a moderate postretirement withdrawal horizon. The target date funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The key difference between the Retirement Funds and the Target Retirement Funds is the overall allocation to equity; although they each maintain significant allocations to equities both prior to and after the target date, the Retirement Funds maintain a higher equity allocation, which can result in greater volatility over shorter time horizons.

* As of 12/31/13

Same underlying funds, asset classes, and sector representation
20 Years of Asset Allocation Innovation

For over two decades, we have managed asset allocation portfolios, adding value through portfolio construction, risk management, and glide path design. A long-term approach underlies this philosophy.

The T. Rowe Price Retirement Active Trusts and Retirement Date Trusts (the “Trusts”) are not mutual funds. They are common trust funds established by T. Rowe Price Trust Company under Maryland banking law, and their units are exempt from registration under the Securities Act of 1933. Investments in the Trusts are not deposits or obligations of, or guaranteed by, the U.S. government or its agencies or T. Rowe Price Trust Company and are subject to investment risks, including possible loss of principal.

Same underlying funds, asset classes, and sector representation

Copyright 2014, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved. Please contact T. Rowe Price with your questions and comments about our funds and services.