Index vs Active Target Date Funds — Which One Is Your 401k In?

61% of Vanguard's 401k participants have their entire retirement in a single target date fund — and almost none of them chose it. Auto-enrollment did. Target date funds are a genuinely good default: one fund, the whole portfolio, automatic rebalancing, and a glide path that shifts you toward bonds as you age. But there's a catch nobody flags. Fidelity Freedom 2065 charges 0.68% a year. Fidelity Freedom Index 2065 charges 0.12%. Same company, same target year, one word apart — and over a career that word is worth about $164,000. In this video: what a target date fund actually holds, how to tell in 5 minutes whether you're in the expensive twin, why the date on the fund is a guess about you rather than a rule, and the one account type where you should never hold one (the mistake that ended in a $106 million SEC settlement). DISCLAIMER: This video is for for educational purposes only and does not constitute financial advice. Always do your own research before making financial decisions.

Added 1 Sept 2026