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Originally published 09/26/2022
Vanguard’s life-cycle investing framework
Figure 1. A systematic framework for validating TDF glide paths
Applying our life-cycle theory to real-world situations
The paper seeks to validate what a growing number of target-date investors already seem to know: Vanguard TDFs are a sensible choice for most retirement income needs. In designing a glide path that supports investors’ needs and aligning it with their retirement age, risk tolerance, and other characteristics, our glide-path approach is most aligned with helping ensure clients have the savings necessary to maintain their lifestyle through retirement.
The paper further stress-tests Vanguard TDFs for varying retirement ages, spending habits, and income levels and, again, finds that for many investors across a wide range of characteristics, the Vanguard TDF is still a great option to help investors meet their retirement goals. Vanguard’s approach to building TDFs rests on a solid foundation of theory and real-world experience that ensures that the wide range of investors who count on TDFs to secure their retirement have an investment solution well positioned to meet their needs.
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