A comprehensive analysis by the Investment Company Institute (ICI) of 700,000 consistent 401(k) participants who held 100% of their balances in target-date funds (TDFs) at the end of 2016 reveals that 85% remained fully invested in TDFs through year-end 2022. The data, drawn from the EBRI/ICI 401(k) database covering plans of all sizes, underscores the stickiness of these default investments despite significant market turbulence, including the pandemic, sharp interest rate swings, and volatile equity markets.
Persistence varied notably by tenure. Among participants in their 50s with five to ten years of job tenure, 88% stayed fully in TDFs, compared with 82% of those with two years or less and 80% of those with more than 30 years. Researchers attribute this partly to the Pension Protection Act of 2006, which made TDFs the default for auto-enrollment, meaning newer hires often had a passive initial allocation.
“The durability of target date funds reflects the value participants place on their intuitive, age-based investment approach,” said Shelly Antoniewicz, ICI Chief Economist. “Their ability to simplify long-term investing has made TDFs a standard option in many 401(k) plan investment lineups.”
The most striking divergence emerged among older savers. Among full-TDF investors in their 60s at year-end 2016, 11% had moved to a 0% TDF allocation by year-end 2022—roughly double the exit rate of every other age group. This pattern held across tenure levels, suggesting age, not job tenure, drives the behavior. Researchers interpret this as a desire for greater portfolio control as retirement nears, allowing customization of asset allocation to individual income needs and risk tolerance.
Younger participants who left TDFs behaved differently, typically shifting to a partial allocation rather than exiting completely. When participants in their 60s did leave, equity allocation changes were dramatic: 47% increased equity exposure by 20 percentage points or more, while 32% cut it by a similar margin. This divergence highlights the limitations of standardized glide paths in accommodating varied retirement strategies.
Across all age groups, 8% of those who left full-TDF positions ended up with zero equities in the year of the move, a figure that rose to 17% among those in their 60s. “Target date funds have evolved with the goal of helping employees save and invest for their retirement,” said Craig Copeland, EBRI Director of Wealth Benefits Research. “Our research shows that most remain invested in them over time, helping them continue to have a diversified investment strategy.”
The asset management industry has taken note of TDFs’ durability. A Deloitte analysis projects that private capital allocations within 401(k) and 403(b) plans could reach 6% of total plan assets by 2030—more than $1 trillion—with TDFs expected to be the primary delivery mechanism. The logic: because TDFs are the dominant default and most participants never touch them, even a modest private capital sleeve can drive enormous flows with minimal active decision-making.
Deloitte also noted that a March 2026 Department of Labor proposed rule introduced a process-based safe harbor for evaluating private capital alongside conventional options, reducing litigation risk for plan sponsors. The same inertia that keeps 85% of TDF investors on the glide path could soon mean passive exposure to private equity and credit by default, not choice. For advisors, this trend underscores the importance of helping clients nearing retirement evaluate whether a one-size-fits-all glide path still serves their needs, or whether a more personalized approach—potentially incorporating private assets—is warranted. As student loan debt poses a growing threat to retirement security for older Americans, such customization becomes even more critical.
