RENEE MONTAGNE, host:

Let's turn now to people who are looking to leave their jobs and still retire comfortably. The problem is, investing for retirement can be complicated. There's lots of jargon, lots of investment choices, and lots of worry about whether those investments are too risky. What if you could replace all of that with one simple act: picking the year you expect to retire. That's what something called target-date funds promise. As part of our series on retirement investing after the crash, NPR's John Ydstie has that story.

JOHN YDSTIE: Target-date funds, sometimes called life-cycle funds, are gaining in popularity. About 70 percent of all employer-sponsored 401(k) plans offer them. But, so far, only about 7 percent of all 401(k) assets are held in target-date funds.

The great advantage of the funds, says Alicia Munnell of the Center for Retirement Research at Boston College, is that they automatically move people from stocks into safer investments, like bonds, as they get nearer to their retirement date.

Ms. ALICIA MUNNELL (Director, Center for Retirement Research at Boston College): Left on their own, they ended up with 65 percent of their assets in stocks in their 50s. These funds would get them down to 30 to 40 percent, automatically.

YDSTIE: The federal government has decided target-date funds are a good option for retirement savings, too. It has given companies permission to automatically enroll new employees in the funds if they don't make a choice on their own.

Mr. JOHN BOGLE (Founder, Vanguard): Target-date portfolios are a very, very good, fundamental idea.

YDSTIE: That's John Bogle, who founded the mutual fund giant Vanguard.

Mr. BOGLE: You've got some stocks and you've got some bonds, and you add to your bonds as you get older. The problem is, they're all so darn different.

YDSTIE: Investors in target-date funds with a retirement date of 2010 found out just how different they can be during the recent stock market collapse. Some lost as little as 10 percent, even though the stock market gave up about half its value. But others lost four times that much, says Mike Alfred of BrightScope, a 401(k) retirement plan rating service.

Mr. MIKE ALFRED (BrightScope): There were investors in 2010-targeted funds that lost over 40 percent. And I don't think they expected - given that they were only a few years from retirement and were in a fund that was supposedly -supposed to automatically adjust - they didn't expect to lose that much money.

YDSTIE: The problem, says Alfred, is that the mix of investments in different funds varies widely, even ones targeted for the same retirement date.

And it became clear, after the market plunge, that some target-date funds designed for a 2010 retirement date held way too much stock.

The lack of clarity about the risks involved in different funds has gotten the attention of Congress. Senator Herb Kohl, chairman of the Senate Special Committee on Aging, says, quote: There's no question we need greater regulation and transparency of these products.

Another big issue is the cost of these funds, says Mike Alfred.

Mr. ALFRED: The research we did for the Senate Aging Committee at the end of last year shows very clearly that these funds are 15 to 20 percent more expensive than the other funds on the core menus offered to American workers.

YDSTIE: That is, the core menu of investment options in the retirement plans offered by employers.

The mutual fund rating service Morningstar says over half of target-date funds have an annual management fee of 1 percent or more. That doesn't sound like much, but every 1 percentage point in fees can reduce your total accumulation by up to 20 percent by the time you retire. There are target-date funds, though, with fees as low as about two-tenths of 1 percent.

Vanguard's John Bogle says some funds are expensive because they double-charge. There's one management fee for the funds assembled into the target-date fund. Then, there's another fee for the target-date fund itself.

Mr. BOGLE: So there are a lot of red flags flying around target-date funds -even as the fundamental idea of structure, and increasing fixed-income exposure as you age, is the right idea.

YDSTIE: So, says Bogle, investigate before you invest in a target-date fund.

John Ydstie, NPR News, Washington.

MONTAGNE: And tomorrow, the big problem with American retirement savings: People aren't saving enough.

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