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Vanguard Target Retirement 2045 Fund: A Savings Strategy For 30 Somethings

Vanguard Target Retirement 2045 Fund: A Savings Strategy for 30-Somethings

The Vanguard Target Retirement 2045 Fund (NASDAQMUTFUND:VTIVX) is a target date mutual fund aimed at those who intend to retire in or around the year 2045. By setting up this fund as a one-stop solution for investors looking for simplicity, the Vanguard Group aims to make it easier to save toward retirement. The fund invests in a number of other Vanguard-run investments, and its asset allocation shifts over time to become more conservative in its investing style. By making changes to the proportion of stocks and bonds in the portfolio, Vanguard Target Retirement 2045 can be a lifelong answer for those who are in their 30s now and are looking to retire roughly 25 to 30 years from now.

What is the Vanguard Target Retirement 2045 Fund’s objective?

The Vanguard Target Retirement 2045 Fund’s objective is consistent with Vanguard’s broader philosophy that covers all of its target retirement funds. The fund keeps a well-diversified portfolio, decreasing stock market exposure gradually over time in favor of increasing bond allocations as the fund’s target retirement date approaches. That trend continues for seven years after the retirement date, at which point the fund mimics the investment philosophy of Vanguard’s Target Retirement Income Fund.

Vanguard advises investors to consider this fund if you’re planning to retire between 2043 and 2047. That corresponds roughly to those born between the late 1970s and the mid-1980s, which picks up most of those in their 30s right now.

Retirement jar with cash and calculator.
Image source: Getty Images.

What is Vanguard Target Retirement 2045’s asset allocation strategy?

Vanguard Target Retirement 2045 currently has an overall asset allocation of about 90% in stocks and 10% in bonds. That seems appropriate for a fund with a time horizon of 28 years before retirement, as it lets investors be more aggressive in their investments in response to the fact that they have plenty of time to recover from any short-term downticks in the markets.

In particular, Vanguard Target Retirement 2045 has allocations to the following four Vanguard mutual funds:

Fund

Percentage

Vanguard Total Stock Market Index Fund

54%

Vanguard…

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