An analysis highlights that the average target-date fund charges approximately 0.30% in fees, which is six times higher than a comparable two-ETF portfolio, such as a 90/10 blend of Vanguard Total World Stock ETF (VT) and Vanguard Total Bond Market ETF (BND), which costs around 0.06%. This significant fee difference could save investors a five-figure sum over a 30-year career.

The report notes that while target-date funds offer the convenience of automatic rebalancing and de-risking as retirement approaches, this automation comes at a cost. Investors with rollover or Roth IRAs have the flexibility to redirect new contributions to the cheaper two-ETF combination, though most 401(k) plans typically restrict such switches. Vanguard's own target-date series is an exception, charging a lower fee of about 0.08%, closely matching the cost of the two-ETF blend.