As managed account usage rises, a new study links target-date funds (TDFs) to an increase in participants’ retirement confidence.
Research from Voya Investment Management finds that 71% of employed TDF investors say they’re confident in reaching retirement goals, compared to 58% of non-investors.
Most attribute their feelings of assurance to the investments—91% of employed TDF investors believe that investing in the funds lightens the stress of retirement planning, compared to 73% of non-TDF investors.
Further, when asked whether investing in TDFs helps boost their confidence in making strong investment decisions, 95% of employed TDF investors agreed and 39% strongly agreed.
“Target-date funds aren’t just investment vehicles — they’re confidence-building tools,” said Barbara Reinhard, CFA, chief investment officer of Multi-Asset Strategies and Solutions at Voya IM. “For plan sponsors and defined contribution specialists, this finding underscores the importance of offering solutions that simplify retirement planning and empower participants.”
Ultimately, when participants were asked if having a TDF increased their confidence in a successful retirement, 92% of employed TDF investors said yes.
Investors listed the qualities that stood out to them with the funds, like ease of use, built-in diversification, professional management and automatic rebalancing. Almost all (96%) of employed participants said they were highly interested in TDFs that provided enhanced diversification, a blend of active and passive underlying investments (95%), and a multi-manager approach (92%).
The findings are a stark differentiator from past research that showed dwindled interest in target-date funds. Rather, participants in an Allspring Global Investments 2025 retirement study said they preferred other investments over TDFs, with many favoring tailored methods rather than a one-size-fits-all approach.
Still, target-date retirement funds remain among the most popular investment options for its diversification and programmed risk management, and especially for participants who don’t want to actively manage their retirement account.
The investment options may also see increased usage soon as it is anticipated to become a primary vehicle for alternative assets in defined contribution (DC) plans. According to a study from T. Rowe Price, retirement plan advisors project TDFs, whether custom or off-the-shelf, to evolve as the top fund for private market assets in 401(k) plans.