Perspectives : Investment | October 30, 2026

Expanding the Target Retirement lineup with a growth-oriented glide path

This article was featured in the latest edition of the Vanguard Target Retirement Funds and Trusts report.

For more than two decades, target-date funds (TDFs) have helped transform defined contribution (DC) plans by making professionally managed, age-based asset allocation accessible to millions of participants. As the retirement landscape continues to evolve, plan sponsors are taking a closer look at how target-date investment designs align with the needs of their participant populations.

For some plans, that includes evaluating whether a higher-equity glide path may better support participants with a greater need, capacity, or willingness to take equity risk in pursuit of long-term growth potential. While higher equity exposure may improve long-term wealth accumulation outcomes, it also introduces greater volatility and the potential for larger short-term losses. As a result, the key consideration is whether that trade-off between additional growth potential and additional equity risk aligns with a plan's participant characteristics and retirement objectives. Vanguard Target Retirement Growth Trusts were developed in response to this emerging need.

A familiar foundation with higher equity exposure

Target Retirement Growth Trusts expand Vanguard's target-date lineup with a growth-oriented glide path for participant populations whose needs, risk tolerance, or retirement objectives may support a higher allocation to equities. However, the underlying investment framework remains familiar: the Growth series maintains the same investment philosophy, underlying building blocks, diversification approach, and disciplined portfolio management process that underpin Vanguard's industry-leading Target Retirement franchise.¹ The key difference is the glide path itself. As shown in Figure 1, the Growth series maintains higher equity exposure throughout the glide path to support greater wealth accumulation and retirement income, reflecting a higher assumed risk profile.

Figure 1. Target Retirement Growth Trusts glide path

Source: Vanguard.

The Growth series begins with a 95% equity allocation, which is maintained until age 45 when the series begins to de-risk. The Growth series glides to a 60% equity allocation at age 65 and reaches a 50% equity landing point at age 72.

Assessing plan fit

A higher-equity glide path may be appropriate for plans whose participants have a greater tolerance for equity risk in pursuit of long-term growth. However, risk tolerance is not one-dimensional. Vanguard believes it is shaped by need, capacity, or willingness for participants to take equity risk over long horizons as outlined in Figure 2. Need reflects the extent to which participants may depend on DC assets to fund retirement spending. Capacity reflects participants’ ability to withstand market volatility, which may be supported by factors such as higher earnings, saving behavior, employment stability, or access to other retirement resources. Willingness can be inferred from observable plan-level participant investing behaviors, such as participant allocations outside the qualified default investment alternative (QDIA). Additionally, the chosen target-date solution should align with the plan’s retirement objectives.

Figure 2. When a higher-equity glide path may be appropriate

For the Growth series, relevant characteristics may include:

Greater reliance on accumulated retirement savings. Participants whose retirement spending needs are expected to depend more heavily on DC plan assets. This may include higher-income populations, for whom Social Security would replace a lower share of pre-retirement income, and therefore must rely more on their accumulated savings to fund retirement spending.

Additional retirement resources. Participants who have access to pensions or other sources of retirement income that provide greater financial flexibility and support a higher capacity for equity risk.

Strong savings behavior and risk capacity. Participants with strong savings habits, ongoing contributions, and other characteristics that may support a greater ability and willingness to withstand market volatility in pursuit of higher long-term growth.

Understanding the risk-return trade-off

For participant populations that are expected to rely more heavily on DC assets in retirement, the additional growth potential may help support higher retirement spending objectives. However, those potential benefits come with greater expected volatility and the possibility of larger short-term drawdowns. Participants must be willing to tolerate periods of market stress and uncertainty that result from higher allocations to equities.

Conversely, participants with access to defined benefit pensions or other sources of guaranteed retirement income may have greater capacity to remain invested through periods of market volatility. Because these income streams provide bond-like characteristics, they can support a more growth-oriented asset allocation, potentially improving the portfolio’s overall risk-return trade-off while helping maintain retirement income security.

Fiduciary considerations when evaluating glide paths

From a fiduciary standpoint, the central question is not whether one glide path is universally superior to another. The more important question is whether a glide path is appropriately aligned with the needs, risk tolerance, and retirement objectives of a plan's participant population. While there is no single framework that applies to every plan, evaluating TDF suitability often begins with understanding participant characteristics and assessing how those characteristics align with the design of a particular target-date solution. Vanguard continues to research this topic, and we plan to share additional insights in the future.

By understanding participant characteristics and their impact on the need, capacity, or willingness of participants to take on additional equity risk, plan fiduciaries can determine whether a more growth-oriented target-date design is appropriate for their plan. However, these characteristics alone do not automatically make a higher-equity glide path appropriate. Rather, they are examples of inputs to the decision-making process.

Aligning glide-path design with plan characteristics

Our Target Retirement Funds and Trusts remain effective solutions for many plans. They are designed to support retirement readiness across a broad range of participant populations, balancing growth potential with downside risk through participants’ lives. While both strategies are built on the same investment foundation, Figure 3 explains how they differ in intended participant profile and equity allocation over time. We believe our suite of TDFs provide plan sponsors with greater flexibility to align target-date design with participant characteristics while remaining within Vanguard's target retirement framework.

Figure 3. Vanguard target-date series comparison

Reaffirming our commitment to evolving target-date strategies

Vanguard Target Retirement Growth Trusts reflect an important recognition in target-date investing—that evaluating plan fit extends beyond selecting a target-date fund and includes assessing whether the glide path aligns with participant needs and retirement objectives.

By expanding our target-date lineup with a growth-oriented option, Vanguard aims to provide plan sponsors and consultants with greater flexibility in aligning the glide path with participant characteristics, while maintaining the disciplined design, diversified implementation, low costs, and research-driven philosophy that have long defined Vanguard's approach to retirement investing.

Related links

Vanguard Target Retirement Growth Trusts

¹ TDF assets are based on data from Vanguard, Morningstar, and company public filings, as of June 30, 2026.

Notes:

For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

All investing is subject to risk, including the possible loss of the money you invest.

Diversification does not ensure a profit or protect against a loss.

Investments in Target Retirement Funds and Trusts are subject to the risks of their underlying funds. The year in the fund or trust name refers to the approximate year (the target date) when an investor in the fund or trust would retire and leave the workforce. The fund/trust will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Income Trust/Fund and Income and Growth Trust have fixed investment allocations and are designed for investors who are already retired. An investment in a Target Retirement Fund or Trust is not guaranteed at any time, including on or after the target date.

The Vanguard collective trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing.

The Vanguard Life-Cycle Investing Model (VLCM) is designed to identify the product design that represents the best investment solution for a theoretical, representative investor who uses the target-date funds to accumulate wealth for retirement. The VLCM generates an optimal custom glide path for a participant population by assessing the trade-offs between the expected (median) wealth accumulation and the uncertainty about that wealth outcome, for thousands of potential glide paths. The VLCM does this by combining two sets of inputs: the asset class return projections from the VCMM and the average characteristics of the participant population. Along with the optimal custom glide path, the VLCM generates a wide range of portfolio metrics such as a distribution of potential wealth accumulation outcomes, risk and return distributions for the asset allocation, and probability of ruin, such as the odds of participants depleting their wealth by age 95.

The VLCM inherits the distributional forecasting framework of the VCMM and applies to it the calculation of wealth outcomes from any given portfolio.

The most impactful drivers of glide-path changes within the VLCM tend to be risk aversion, the presence of a defined benefit plan, retirement age, savings rate, and starting compensation. The VLCM chooses among glide paths by scoring them according to the utility function described and choosing the one with the highest score. The VLCM does not optimize the levels of spending and contribution rates. Rather, the VLCM optimizes the glide path for a given customizable level of spending, growth rate of contributions, and other plan sponsor characteristics.

A full dynamic stochastic life-cycle model, including optimization of a savings strategy and dynamic spending in retirement, is beyond the scope of this framework.