Welcome back to the Deep Dive. Today we are taking
a deep breath and plunging into probably one
of the most important yet often least understood
investment tools in modern retirement planning.
It really is. Our mission is to decode the investment
vehicle that truly promises that ultimate set
it and forget it retirement strategy. We're going
to try and navigate the sheer complexities of
long -term savings without you know, the crushing
burden of information overload. And get right
to the core of it. Exactly. And that quiet giant
we're talking about is the Target Date Fund or
TDF. And this is such a crucial deep dive because
we aren't talking about some niche product. No.
We're analyzing a specific type of collective
investment scheme that has quietly managed trillions
of dollars globally. It's become the bedrock
of retirement planning for millions of people.
It's basically the default option for an entire
generation of savers. Default investment strategy.
at scale. That's the perfect way to put it. Okay,
let's unpack this immediately. Before we get
into the history and all that, we need a really
clear functional definition. What exactly is
a target date fund based on the sources we've
looked at? So fundamentally, a target date fund
is a mutual fund or it could be a collective
trust fund that contains a single automatic and
strategic mechanism. OK. It's asset allocation
mix. It has to become systematically and automatically
more conservative as a predetermined target date
gets closer. So that date, say 2045 or 2050,
that's my retirement year. Almost always. Yeah.
It corresponds to the investor's planned retirement
year. So the fund itself has a kind of. a maturity
date and its whole risk profile is tied to that
one number that's why you hear all these other
names for them all those synonyms yeah life cycle
funds dynamic risk funds or age -based funds
the core appeal the massive selling point is
that the tdf offers this lifelong managed strategy
that in theory stays perfectly appropriate for
you even if you never log in again Even if you
never rebalance, never review your portfolio
after that first day. Exactly. That ability to
provide this outcome oriented fiduciary conscious
strategy through one single fund choice is what
makes them so profoundly effective. Especially
as a default option. Especially as a default.
They solve the paradox of choice. So if TDFs
are such a dominant force today. Managing trillions.
Let's go back. Let's establish the timeline.
This wasn't something that a government just
mandated out of thin air. It was an invention.
Who was behind it? Yeah, that credit goes to
two individuals, Donald Luskin and Larry Tint.
They were at Wells Fargo Investment Advisors
back in the early 1990s. The early 90s. Right.
And that entity later became Barclays Global
Investors or BGI. And it was BGI that first actually
introduced these funds to the market. That shows
some serious foresight. I mean, they were creating
this thing way before the laws were in place
that would make it a blockbuster. They absolutely
were. They created the structure before the market
demand was really formalized. But, you know,
while they invented the product itself, the core
principle, the idea that your age should determine
your investment risk, that was kind of in the
air, wasn't it? Was there a precedent for it?
There absolutely was. The TDF structure was new,
but this idea of age -based asset allocation.
It was gaining traction on its own. A guy named
Mark Kantrowitz, for instance, he proposed a
very similar approach in the mid -1990s. Okay,
and where did that pop up? What's fascinating
is how quickly his concept was validated and
institutionalized in a completely different area,
college savings plans. The 529 plans. Exactly.
Kantrowitz's strategy was almost immediately
adopted across the board by all 529 plans. Wow,
so that's a huge... Aha moment right there. By
the mid 90s, the financial world had already
accepted that a portfolio should get safer as
you get closer to a goal, whether that's paying
for college or, you know, retiring. Precisely.
That widespread acceptance in college savings
proved the model was sound. It just it set the
stage perfectly for the U .S. retirement boom.
And that boom, as all the sources make clear,
it really points to one single critical piece
of American legislation. The one that took TDFs
from a clever idea. To an industry standard.
The one that lit the fuse. Which was? The Pension
Protection Act of 2006. This is the absolute
inflection point in the story. It was a legislative
game changer because it fundamentally shifted
the burden and the liability for employer sponsor
401k plans. Especially with auto enrollment becoming
so common. Exactly. Let's drill into that a little.
Auto enrollment sounds great. You're automatically
signed up to save. Yeah. But. if I get enrolled
and I don't choose an investment, my employer
as the fiduciary is on the hook for whatever
they put my money into. Right. That seems like
a huge legal risk. It is a massive risk. And
the PPA of 2006 solved this by creating a legal
category for something called Qualifying Default
Investment Alternatives, or QDIAs. QDIAs. And
this new category offered what's called a safe
harbor protection for the employer for the 401k
plan sponsor. So if the employer puts my unallocated
funds into a QDIA. they're legally protected
if I complain later that it didn't perform well.
That's it. They're shielded from that fiduciary
liability. So the real driver for the explosion
of TDFs wasn't just that they're convenient for
me, the investor. It was fiduciary protection
for the companies. That is the critical insight.
Yes, TDFs fit the QDIA criteria perfectly. They
were designed to be prudent. diversified, and
most importantly, risk appropriate based on a
time horizon, all without needing any active
decision from the employee. They were a necessary
legal shield. For the entire defined contribution
system. Before 2006, TDFs were an option. After
2006, for any risk -averse plan sponsor, they
were a necessity. And that regulatory safe harbor,
that's what turned the growth from, you know,
a straight line into an exponential curve. But
this whole movement wasn't just a U .S. thing,
was it? We saw a similar shift happening across
the Atlantic. Absolutely. The U .K. followed
a very similar path, which just reinforces how
universal this solution is. When the U .K. enacted
its own auto enrollment legislation in 2012,
TDFs immediately became central to their retirement
system, too. Just like in the U .S. Just like
in the U .S. The sources confirm their design
satisfied the Department for Work and Pensions'
strict criteria for an eligible default fund.
I'm curious, were there any big differences in
how TDFs had to adapt for the U .K. market versus
the U .S.? I mean, the U .K. system is often
much stricter on fees and charges. That's a great
point. And yes, the U .S. market is often built
around mutual funds that can have relatively
higher expense ratios. In the U .K., the focus
on value and efficiency is intense. Especially
in those big national schemes. Right. Particularly
in the mass market schemes like the National
Employment Savings Trust or NEST. NEST uses TDFs
and their design had to stick to really strict
regulatory guidelines, including a strong focus
on limiting annual fees. So what did that do
to the funds themselves? forced providers to
use lower cost index funds more often and to
really refine their operations to meet those
mandated fee caps. So structurally, TDFs in the
UK are often cheaper and more index heavy than
a lot of their US counterparts. It really shows
the flexibility of the concept. So it adapts
to the local rules, but keeps the same core objective.
Exactly. So whether it's the US PPA or the UK
auto enrollment regime, the legal necessity for
simple, automatically adjusting default investment.
That's the key to their global adoption an invention
in the 90s a legal mandate in the 2000s and then
global adoption the foundation is set okay now
let's get to the core mechanism the actual physics
of how these funds operate the concept sounds
almost too simple risk goes down as time passes
but let's unpack the design philosophy that makes
this a fiduciary standard The underlying philosophy
is, like you said, intensely pragmatic, but it's
also backed up by a lot of academic rigor. Research
consistently shows that age and your time horizon
are the single most important factors in setting
a long term investment strategy. So TDFs are
built around the arc of a human life. The typical
earnings curve and the moment you're going to
need that retirement income. Yes. OK, let's follow
the money through that arc. Describe the allocation
shift for me from the day a 25 year old opens
their account to the day they hit 65. So in the
early years, when you're young, you have maximum
time and critically a very high capacity for
risk. A market downturn is just a temporary hiccup.
You have decades to recover from a buying opportunity.
Even you could see it that way. So the funds
allocation is heavily focused on return seeking
assets. We're talking primarily equities or stocks
which offer the highest expected long term returns.
It's an aggressive accumulation phase. And as
time progresses. and this shift is very strategic
and gradual, the fund systematically reduces
its exposure to those equities. It moves year
after year towards capital preservation assets.
So bonds. Generally high quality bonds, yes.
Things like government bonds and index linked
bonds. These are lower risk, lower volatility,
and they're designed not for maximum growth,
but to protect the wealth you've already built.
And this systematic shift has a very catchy industry
name for it and a great analogy. It does. The
technical term is the glide path. The glide path.
And the analogy is highly visual and really effective.
It's the path of an airplane coming in for a
landing. Oh, I like that. The airplane, which
represents the fund, starts high, high risk,
high return assets, and then it smoothly, incrementally
descends. The landing is that moment the fund
arrives at the target date with the maximum exposure
to the low risk assets you need to protect your
capital. The glide path analogy is brilliant
for explaining the what, but we need to go a
little deeper into the theoretical foundation
that justifies the why. You mentioned it's more
than just simple rules about time. Oh, absolutely.
The sophistication. comes from combining two
major financial theories. First, you have modern
portfolio theory, MPT, which is the classic framework
for optimizing risk and return through diversification.
But second, and this is more important for the
shape of the glide path, is the theory of human
capital. Okay, we have to define human capital
precisely in this context. It feels key to understanding
why a 25 -year -old should be 90 % in stocks.
It's absolutely key. So in the context of retirement
planning, human capital is defined as the present
value of all of your expected future earnings.
Well, paychecks I haven't earned yet. Exactly.
Think about it. When a 25 -year -old starts their
career, they're expecting maybe 40 years of regular
paychecks. If you calculate the net present value
of that huge, steady stream of income, it functions
exactly like a massive, stable, bond -like asset
that's sitting outside your 401k. So my total
wealth isn't just my portfolio balance. It's
the portfolio plus all the money I'm going to
make in the future. Precisely. And because that
future salary stream, your human capital, is
inherently stable, it acts as this huge bond
allocation on your total economic balance sheet.
This tremendous built -in stability is what frees
you, the investor, to take maximum risk with
your relatively small financial portfolio. I'm
effectively diversified by my job. You are. But
here's the crucial point. As you age and approach
retirement, your remaining human capital, the
number of future paychecks you have left, shrinks
towards zero. I see. So as that big, invisible
bond -like asset disappears, my financial portfolio
itself have to take over the job of providing
stability. That explains the relentless shift
into actual physical bonds in the TDF. That is
the core justification for the glide path. The
shift isn't just arbitrary. It's mathematically
replacing a decreasing asset, your human capital,
with an increasing one, financial bonds, to keep
your overall risk profile consistent throughout
your life. That makes profound sense. It connects
your life stage economics directly to your investment
strategy. But this brings up a crucial technical
nuance, one that separates modern TDFs from older
strategies. We need to explain the difference
between TDFs and the old concept of lifestyling.
A very important distinction. It all lies in
the process of de -risking. Earlier lifestyling
techniques relied on what we'd call an automated
or deterministic approach. Deterministic meaning
preset. Exactly. The investment plan was set
in stone from day one. It used a rigid schedule
like reducing equity exposure by exactly 1 .5
% every single January 1st. No matter what the
markets were doing, it was purely mechanical.
And TDFs today use a superior method. The professionally
managed ones, yes. They use what's called a managed
or stochastic approach. Stochastic implies that
random variables, market movements are incorporated
into the process. So it's dynamic. It's dynamic.
A managed approach means the fund manager is
actively monitoring the reallocation. They might
make discretionary adjustments based on volatility
or interest rates or complex risk modeling. They're
trying to optimize the path, not just blindly
follow a preset timeline. Let's use a real world
example of that difference. Say there's a sudden
unexpected spike in interest rates, which crushes
bond values. Yeah. How would a deterministic
fund react versus a stochastic one? Great question.
A deterministic fund has no choice. It has to
follow the program. If January 1st rolls around,
it sells the preset amount of stocks and buys
the preset amount bonds, even if that means buying
bonds at a terrible price right after a crash.
Locking in losses or poor yields. It's rigid.
It's rigid and risk blind. In contrast, a stochastic
or managed TDF exercising its fiduciary care
might pause that shift. The manager might temporarily
hold more cash or shift to higher quality, shorter
duration bonds. to ride out the rate spike and
wait for the market to stabilize before continuing
to de -risk. So the stochastic model understands
that the pace of the descent should adapt to
the wind speed of the market. To ensure a smoother,
more optimized landing, that's the perfect analogy.
It's a difference between an autopilot that is
set once and never adjusts versus a seasoned
pilot constantly making micro adjustments based
on turbulence and wind shear. A critical distinction.
Yeah. That's what provides the higher level of
fiduciary care. Absolutely. That ability to dynamically
adapt is why TDFs are considered a structural
improvement over their deterministic predecessors.
They acknowledge the future is uncertain and
needs to be managed. Now that we've established
the engine, let's talk psychology. TDF search
is inherently linked to behavioral science. They
feel like the ultimate example of a public policy
nudge. Oh, they absolutely are. The core behavioral
benefit is that they address choice paralysis.
When you're auto enrolled and you face a menu
of 20 different large cap, mid cap, small cap
international funds. People freeze. They do nothing.
They either choose nothing or they put everything
in the lowest risk, lowest return cash option
just out of fear. And that leads to what we call
inferior outcomes. So the nudge simplifies that
whole complex menu down to a single easy question.
When do you plan to retire? That's it. And beyond
that initial selection, TDFs mitigate active
behavioral risks for your entire life. They neutralize
your worst instincts. Like trying to time the
market. Or panic selling during a downturn, which
is the most destructive thing you can do. By
locking you onto that automatic glide path, the
TDF forces you into a disciplined, rational,
long -term strategy. It prevents those emotional,
short -term mistakes that can just decimate decades
of savings. It's forced discipline, which is
invaluable. But let's pivot to a fascinating,
more modern intersection, the link between TDFs
and personal values, specifically socially responsible
investing, or SRI, and what younger investors
are demanding. This is where we see the TDF structure
really adapting to the market. The Solst material
highlights some strong research showing a clear
demographic shift. A 2016 study found that 74
% of retirement plan participants said they'd
like to see more socially responsible investments
in their offerings. 74%. That's a huge majority
wanting their savings to align with their values.
That's a powerful mandate for change. And the
reasoning is clear. 78 % in that same study said
they believe it's important to make the world
better while also growing their personal assets.
It's a desire for congruence between finance
and societal good. And when you filter that down
specifically to the fastest growing group of
Savers Millennials, The data gets even sharper,
doesn't it? It really does. A 2016 survey of
defined contribution plan participants had some
compelling numbers. A staggering 71 % of millennial
age investors said they would be more willing
to contribute to their retirement plan if they
knew their investments were doing social good.
Wow. That is a direct line from values to actual
savings rates. If plan sponsors want more engagement,
they have to integrate these values. And it doesn't
stop there. The survey also found 84 % of millennials
want their investments to reflect their personal
values, and 77 % want more socially responsible
options available in their plans generally. These
aren't just abstract desires, they're driving
forces in investment selection. Okay, let me
play devil's advocate here for a second. While
the TDF is great for simplicity, doesn't adding
SRI criteria introduce new risks? I mean, if
you screen out entire profitable sectors like
oil and gas, for example, aren't you potentially
sacrificing the broad diversification that MPT
demands and maybe even hurting overall returns?
That is the essential tension, and it's a very
valid critical point. The counterargument is
that TDF managers, as fiduciaries, have to balance
this. They have to weigh the desire for values
-based investing with their primary duty, which
is providing a reasonable retirement outcome.
So how do they do that? They typically handle
it in a couple of ways. First, they don't necessarily
exclude entire industries, but they might screen
companies based on ESG environmental, social,
governance criteria within those industries,
picking the best -in -class performers. Okay,
so not throwing the baby out with the bathwater.
Right. And second, many fund families now offer
two versions of their TDFs, a standard one and
an SRI or ESG focused one. This lets the investor
make the choice. You can still pick a simple
TDF, but you have the option to trade maximum
theoretical diversification for that value alignment
if you want. So the TDF structure by being a
single curated fund is the perfect vehicle for
that. You still only have to pick one fund. the
2050 SRI fund, instead of building an entire
ethically screened portfolio yourself. Exactly.
It leverages the nudge without forcing every
single investor to compromise. It just shows
how dynamic this financial tool really is. We've
done the origins, the mechanics, the psychology.
Now let's chart the sheer, almost unimaginable
scale this product has achieved. Target date
funds aren't just an option anymore. They're
a dominant market structure managing an astonishing
amount of money. The sources show a truly explosive
trajectory, almost all of it driven by that 2006
legislation. Since the Pension Protection Act,
TDF assets under management, or AUM, have grown
by more than 10 times. That level of institutional
adoption driven by regulation is almost unprecedented
in modern finance. Let's run through the numbers
slowly because the scale is really hard to wrap
your head around. Okay. So we saw assets climb
steadily, hitting $763 billion by the end of
2015. But the acceleration just kept going. By
March of 2020, total assets in target date mutual
funds and collective investment trusts, or CITs,
totaled approximately $1 .9 trillion. Almost
$2 trillion. That represents the foundational
savings of a huge part of the American workforce.
That number alone makes TDF performance a matter
of national economic importance. And if we look
at the breakdown by the end of 2020, you see
a shift. Assets and CITs reached $1 .18 trillion,
while traditional mutual funds held $1 .57. trillion.
The combined total is just massive and it keeps
growing. And behind these trillions are the titans
of asset management. Who are the key players
driving this in the U .S.? It's basically a who's
who of global finance. You have Fidelity, Vanguard,
T. Rowe Price, Principal Funds, Wells Fargo,
American Century, Northern Trust. And one really
big one. And of course, BlackRock. It's crucial
to mention them. They manage the life cycle funds,
which are the TDFs for the U .S. government's
thrift savings plan. That gives them a massive
stable pool of federal employee retirement money.
An incredibly important role. But you mentioned
a technical detail earlier about the difference
between mutual funds and those collective investment
trusts or CTFs. You said makes tracking the true
scale of all this complicated. Can you explain
why CTFs create a bit of opacity? This is a critical
point for anyone trying to understand the market
data. The actual size of a manager's TDF assets
is often really difficult to estimate accurately
because a lot of the largest plans, especially
institutional 401ks, use collective trust funds
instead of publicly registered mutual funds.
What's the difference operationally? So CPFs
are similar to mutual funds, but they aren't
registered under the Investment Company Act of
1940. They're regulated differently, often by
the OCC, and they're typically only available
to qualified institutional investors like big...
And because they aren't publicly registered?
They don't show up in the common, widely published
AUM estimates from places like Morningstar or
Bloomberg, which mostly focus on retail mutual
funds. So when we see a headline that TDF assets
are $1 .9 trillion, that number is likely an
understatement. The assets in these opaque institutional
CTFs, like the ones used heavily by Northern
Trust, are often just not in that figure. Precisely.
The true institutional scale is likely much larger.
The opacity of CTFs is a major factor in market
analysis, and it just confirms that the TDF strategy
is even more dominant than the retail reporting
suggests. And as we said, this isn't just a U
.S. story. Let's revisit the U .K. market. It's
smaller in absolute terms, but it's just as reliant
on TDFs structurally. The U .K. market is playing
catch up. Yeah. Their first TDF launched in 2003.
Current AUM is around 4 .0 billion pounds. But
that figure is expected to accelerate significantly
because of their ongoing auto enrollment legislation.
And who are the early adopters there? It's the
ones striving to change. It's the multi -employer
pension schemes, what they call master trusts.
So they're acting just like the U .S. 401k sponsors
did after 2006. They need a safe default structure.
Exactly. You see examples like the BlackRock
Master Trust using BlackRock's TDFs and the Cary
Workplace Pension Trust using Birthstar's TDFs.
It just clearly shows that the institutional
default investment architecture in the U .K.
is mirroring the TDF reliance we saw in the U
.S. Given that TDFs are built on these twin pillars
of modern portfolio theory and fiduciary conservatism,
you would assume they'd be free of major controversy.
They promise a smooth landing. That's the promise.
But as the 2008 financial crisis showed, when
you have trillions of dollars involved, the execution
can expose some serious systemic flaws. What
was the critical wake -up call for TDF critics?
The critical moment was absolutely the 2008 global
financial crisis. Suddenly, critics were raising
major concerns about the unexpected and, frankly,
significant volatility that some near -dated
TDFs showed during that period. And this is the
core puzzle, right? Volatility is expected when
you're young. And the fund is 90 % in stocks.
But funds with a target of, say, 2010 or 2015,
they should have been near the bond -heavy capital
preservation stage. That's why it was so shocking.
Volatility was completely unexpected in funds
nearing their target date, the stage we all associate
with safety, with money market funds and bonds.
The losses in some cases were severe enough that
people who thought they were five years from
retirement suddenly saw double digit losses on
their protected capital. Which suggests some
of those near dated funds were just not positioned
as conservatively as their name would imply.
How did that happen? Were they just holding too
much stock? That was part of it. Yes. Some managers
had a much stickier equity allocation, meaning
they might have kept 20 percent or even 30 percent
in stocks right up to the target date. But it
wasn't just equities. What else was in there?
The sources suggest that some of these near dated
funds were also holding higher risk bond instruments,
things like lower rated corporate bonds or even
mortgage backed securities to try and get a higher
yield. And those assets performed terribly during
the liquidity crunch of 2008. So if the plane
that's supposed to be landing smoothly suddenly
drops altitude violently, the regulators are
going to step in. What was the government response
to this crisis of confidence? It was immediate
and serious. The SEC, the Securities and Exchange
Commission, and the Department of Labor, the
DOLE, they hosted a joint hearing on examining
target date funds in June of 2009. The whole
focus was to understand why seemingly identical
products behave so differently under stress.
Did they conclude that TDFs were fundamentally
flawed, or was it more a problem of execution?
They concluded it was a problem of non -standardized
execution and, more importantly, insufficient
disclosure. TDFs as a concept were deemed a welcome
innovation. They solved a major problem. However,
the regulatory consensus was that disclosure
about the specific asset mix had to be significantly
improved. So the core issue was a lack of clarity
on the glide path. If I, the investor, choose
a 2025 fund and my colleague chooses a 2025 fund
from another company, we just assumed we were
buying the same risk profile. 2008 proved that
was absolutely not the case. That is the crux
of the issue. The investigation revealed that
glide paths can differ dramatically from one
manager to the next. Some glide paths are to
retirement, meaning they hit their most conservative
mix right at the target date. But others are...
through retirement. Through retirement. What
does that mean? It means they stay somewhat aggressive
at the target date, assuming the investor will
continue to spend that money over 20 or 30 years
in retirement. They only reach their most conservative
point several years after the target date. Ah,
the difference between a to glide path and a
through glide path. That's a massive difference
in risk exposure right at that critical moment.
It is. And the lack of standardization meant
investors couldn't easily compare the level of
equity exposure being held near that landing
date. That lack of comparability was identified
as the key source of the confusion and the disappointment.
So what was the result? Did the SEC impose a
standardized glide path? No. They published new
rules on disclosures for target date funds in
2010. They didn't mandate that all 2025 funds
must hold the exact same percentage of bonds,
but they did mandate unprecedented transparency.
So they forced them to show their work. Exactly.
Fund managers were forced to clearly articulate
and advertise their specific glide path, especially
emphasizing the fund's asset allocation, specifically
the equity percentage, at the target date itself.
This finally allowed investors and plan sponsors
to compare the true risk profiles of competing
funds. So the ultimate takeaway for you, the
listener, isn't that TDFs are inherently risky,
but that the concept, while simple, is executed
in very diverse ways. Precisely. The goal was
to bridge the gap between that simple promise
safety near retirement and the complex reality
of varying strategies. If you're invested in
one, you have to look up that fund's specific
glide path and verify its equity exposure at
the target date. The regulations now exist to
make sure you can find that crucial number. Okay,
let's bring this all together. This has been
a true deep dive into an investment vehicle that
really defines modern savings. We started with
the invention by Luskin and Tint, and we followed
the massive structural change from the Pension
Protection Act of 2006. Which created that fiduciary
protecting QDIA category. Right. And then we
broke down the core engine, the glide path. that
systematic model that shifts from aggressive
stocks to conservative bonds. And we learned
that strategy is rooted in sophisticated theory,
the combination of modern portfolio theory with
the concept of human capital, where your future
earnings act as this massive initial bond allocation.
We also recognize the powerful role of TDFs in
behavioral economics. They act as a critical
nudge to simplify choice and stop us from making
bad emotional decisions. And we saw how the structure
is flexible enough to integrate the growing demand
for socially responsible investing. Especially
among millennial investors who are tying their
contributions directly to their values. And finally,
we mapped the explosive scale reaching approximately
$1 .9 trillion in U .S. assets and addressed
that necessary regulatory response after 2008,
which mandated clear disclosure about... those
different to and through glide paths. Ensuring
investors could finally understand the specific
landing trajectory of their funds. It's a powerful
tool. built on complex theory but marketed on
simple convenience. But if we look ahead, we
need to consider how those theoretical underpinnings
might need to evolve. I agree completely. The
entire architecture of the glide path relies
so heavily on that foundational assumption of
human capital, the present value of your expected
future earnings, and a predictable working life.
The current model assumes your human capital
systematically declines to zero around age 65.
Which necessitates that fully conservative shift
in the portfolio. Right. But the world of work
and life expectancy That's a really good point.
So here is a final provocative thought for you
to consider. Building on that human capital concept,
if we assume that people might retire later or
they might have these intermittent periods of
late life retraining that temporarily rarely
regenerates their earning capacity, their human
capital, how might that force a fundamental evolution
of the standard TDF glide path? If that invisible
human capital asset doesn't disappear cleanly
at age 65, then the current airplane landing
glide path, which is designed for that very disappearance,
might not be optimal anymore. It raises some
fascinating questions. Do glide paths need to
become flatter? Maybe stay 10 % or 15 % in equities
for years longer? Or in the future, might we
see stepped glide paths that have new temporary
periods of aggressive investing later in life
to account for these late career shifts? If the
assumption of a straight line to the end changes,
the path itself must change. Food for thought,
indeed. The target date might not just be a date
on a calendar, but a much more flexible concept
tied to our own economic output. Thank you for
guiding us through this essential deep dive into
target date funds. It was my pleasure. We'll
catch you next time for the next Deep Dive.