Dave Ramsey says target-date funds can become so conservative that inflation starts to erode returns as investors age. For people using a 401(k), IRA, or Roth IRA, that leaves a basic choice: accept a built-in glide path toward bonds or keep more growth exposure inside retirement accounts.
“If you’re not careful, your target-date fund might be so conservative that inflation starts to kick your butt as you age,” Ramsey said. He argues that investors should first get out of debt and save 3–6 months of expenses before putting money to work, then direct 15% of income into tax-advantaged retirement accounts.
Ramsey's 15% retirement rule
15% of income is Ramsey’s next step after debt and emergency savings, and he says that money belongs in tax-advantaged accounts such as 401(k)s and IRAs. He also said, “You’ll get the most bang for your buck by using tax-advantaged investment accounts,” and added that pretax investment accounts give a tax break on contributions now, while taxes are paid on withdrawals in retirement.
That framework pushes savers toward growth stock mutual funds rather than a target-date fund that steadily cuts stock exposure over time. Ramsey said, “We recommend keeping growth stock mutual funds in your portfolio, even after you retire. Your money can still grow.”
Vanguard backs target-date funds
Vanguard takes the other side of the same tradeoff. It said, “We blend investment theory and behavioral insights to design target-date funds (TDFs) that focus on helping investors save enough to have lasting retirement income,” and added that its low-cost funds are built with portfolio construction best practices.
Vanguard also said, “This results in a TDF that delivers broad global diversification and balances market, inflation, and longevity risks in an efficient and transparent manner.” In practice, that means the fund does the shifting for savers who want one path instead of managing their own stock-and-bond mix.
Growth stocks versus glide paths
Mutual funds spread money across many companies, which reduces the risk of owning a single stock or chasing trendy names. Ramsey says that kind of diversification still leaves room for growth stock mutual funds even after retirement, while Vanguard’s target-date design deliberately moves in the opposite direction as age rises.
The unresolved issue for savers is how much conservatism is enough. If a target-date fund cuts growth too quickly, Ramsey’s warning becomes the risk; if an investor keeps too much stock risk too late, Vanguard’s diversification logic is the safer default. The decision sits inside the same 401(k), IRA, or Roth IRA account, but the mix changes the path the money takes over decades.
