Criticism of target-date funds is heating up in the aftermath of hearings by the SEC and the Department of Labor. But rather than illuminating the retirement investing problem, the discussion has only highlighted a yawning deficit in the public debate.
The first criticism of target-date funds is that they are too risky, particularly the 2010 funds for those approaching retirement, which fell sharply in the 2008–2009 market meltdown. Policymakers and commentators complain that the risks were too large. The Federal Thrift Savings Plan for federal employees is sometimes held up as a better model for the private sector. It had a 2010 fund that declined by a small amount.