Bonds have been sinking for years, dragging down retirement funds despite their reputation for lower risk. A dollar invested in the S&P 500 has more than doubled since 2021, while the Bloomberg US Aggregate Bond Index has lost value. Target Retirement funds allocate a larger share of assets to bonds for older investors, exposing them to greater losses. Vanguard’s 2025 Target Fund holds over half its assets in bonds, compared to just 8% in the 2065 version, highlighting the uneven impact of bond performance on savers at different life stages.

The article underscores that while bonds are traditionally seen as safe, their recent negative returns were foreseeable. Mechanical allocation formulas, which increase bond percentages with age, have left older retirees more vulnerable. Investors are urged to reconsider a "set it and forget it" approach and factor in bond market math.

With all eyes on Micron and upcoming inflation data, the broader market remains volatile. The disparity between stock and bond performance suggests a need for more nuanced retirement planning strategies.