How to read Vanguard Target Retirement Allocation to underlying funds?

[wolfv]

From https://advisors.vanguard.com/investmen ... #portfolio

Under the heading "Allocation to underlying funds":

• In 2020 the allocation is 36.92% stocks and 61.87% bonds
• In 2070 the allocation is 89.85% stocks and 10.16% bonds

So the stock/bond ratio is increasing?
I was expecting Target Retirement stock/bond ratio to decrease over the years.

What am I not understanding?

[steadyosmosis]

reply removed

[randomwalk]

From https://advisors.vanguard.com/investmen ... #portfolio

Under the heading "Allocation to underlying funds":

• In 2020 the allocation is 36.92% stocks and 61.87% bonds
• In 2070 the allocation is 89.85% stocks and 10.16% bonds

So the stock/bond ratio is increasing?
I was expecting Target Retirement stock/bond ratio to decrease over the years.

What am I not understanding?

Those are the current allocations (as of 10/31/2024) of the funds with those names. If you click on the year at the top of each column, it'll take you to that fund (e.g., clicking on 2070 takes you to VSVNX, the Target Retirement 2070 Fund).

In other words, the Target Retirement 2070 Fund's current allocation is 89.85% stocks and 10.16% bonds, while the Target Retirement 2020 Fund's current allocation is 36.92% stocks and 61.87% bonds.

The link you provided, to the Target Retirement 2025 Fund, has that fund's current allocation highlighted in gray.

[goingup]

I might not understand your question but…
You’d have chosen the TD 2020 if you planned to be retirement age in 2020. So, in theory, you’d now be 60+ in age and have that conservative allocation.

You’d choose the TD 2070 if you were now a younger person planning to retire in 2070. The allocation would be mostly stock funds.

If this is obvious to you I apologize for the pedantry!

[rkhusky]

Over the next 50 years, the 2070 fund will move from its current AA of 90/10 to the current AA of the 2020 fund (37/63) and ending at 30/70 in 2077.

[nisiprius]

You are not understanding that the years you are looking at are part of the fund's name. And you are not understanding that Vanguard's page for VTTVX is showing a summary table of all of its target retirement funds, not just VTTVX, and that is confusing.



You are misreading a table as if it referred to the asset allocation VTTVX had and will have at various dates. It isn't a table of what VTTVX will do. It is a table showing every Target Retirement fund and what that fund's allocations are now. Only the highlighted column is about Target Retirement 2025, the others are about other funds. And it's about 2024 and only 2024, not any other year.

Clue #1 is that it says "as of 10/31/2024." It's about twelve different funds today. It's not about one fund at twelve different times.

Clue #2 is that the last column is headed "Income" instead of a year. That could be a clue that we're looking at fund names, because there's no year named "Income" and there is a fund named "Vanguard Target Retirement Income."

Higher up on the page is the chart showing what VTTVX will do over the years, but it happens to be graduated in terms of "years before or after target date." So for VTTVX you'd add 2025 to all the X-axis numbers.



By doing it that way they can use the same charts for every Target Retirement Fund.

[rkhusky]

Higher up on the page is the chart showing what VTTVX will do over the years, but it happens to be graduated in terms of "years before or after target date." So for VTTVX you'd add 2025 to all the X-axis numbers.



By doing it that way they can use the same charts for every Target Retirement Fund.

This graph is not correct. The TR funds start decreasing stocks about 25 years from the target year, hit 50/50 in the target year, and then drop to 30/70 seven years later. The 25 point needs to be shifted to the right about 5 years, and the 0 and 7 points about 10 years to the right, where the slopes change.

[wolfv]

Thank you for all your thorough explanations.