Target-date mutual funds, long touted as simple 'set it and forget it' retirement solutions, are leaving many near-retirement baby boomers dangerously exposed, according to financial experts. These funds automatically shift portfolios from aggressive stock-heavy mixes to supposedly safer allocations as investors approach their target retirement year. However, the fixed glide path used to determine these shifts can result in portfolios holding excessive stock risk right at retirement, potentially devastating savings during market downturns.

The popularity of these funds, now holding over $4 trillion in assets, exploded after the 2006 Pension Protection Act mandated them as default 401(k) options. A 2060 target-date fund might hold 98% stocks at retirement, while others maintain 60% stock exposure, exposing retirees to significant volatility. Losses of 17% to 24% occurred in 2020 funds during the pandemic crash, highlighting the danger.