Rocky Stock Market Tests Target-Date Funds

Target-date mutual funds, which shift to less risky securities over time, weren't conservative enough to keep investors close to retirement from losing money.

The average 2010 target-date mutual fund lost 25% last year, according to research firm Lipper. That's better than the 37% loss of the S&P 500 Index, but not what one would hope to see two years before they plan to retire.

Mutual fund firms introduced target-date mutual funds more than 10 years ago, billing them as a hassle-free way to save for retirement. However, the stock market spasms of 2008 pushed many target-date funds off their moorings. Now, investors planning to retire by 2015 are facing significantly smaller nest eggs. ...