BlackRock's target-date funds are about to get riskier. Here's what you need to know.

By Jessica Hall

Hiking risk between the ages of 45 and 60 could result in greater retirement wealth about 75% of the time, BlackRock says

About 60% of 401(k) plan participants invest in target-date funds, according to BlackRock.

Target-date funds, the set-it-and-forget-it investment, are about to get a little riskier for one group of workers, BlackRock said.

People are living longer and earning steady income for longer periods of time, so BlackRock's target-date funds will now have a higher exposure to stocks, the asset manager said in a regulatory filing. Target-date funds, which feature a mix of stocks and bonds that are adjusted for asset allocation and risk as an investor approaches a specific retirement year, appeal to people who don't want to actively manage their retirement accounts.

Based on income and life-expectancy data, BlackRock said it would make a modest increase in equity allocations for mid- to late-career investors for the majority of its target-date funds. An increase in risk between the ages of 45 and 60 could result in higher retirement wealth about 75% of the time, the firm said. About 60% of 401(k) plan participants invest in target-date funds, BlackRock's data show.

Workers "can afford to take modestly more financial risk later in their careers," BlackRock said.

BlackRock, which managed about $12.5 trillion in assets as of 2025, cited several reasons for the change: Americans on average are earning a steady income for longer, populations are aging and longevity is increasing. In addition, with traditional pension plans mostly a thing of the past, the burden of saving for retirement largely falls on workers.

Americans are facing a retirement crisis - they are living longer, paying higher healthcare costs and dealing with stubborn inflation. About 56 million Americans lack access to a retirement plan through their employer, according to AARP. And the specter of Social Security benefit cuts also looms: Retirees will receive an expected 20% less by 2032 unless Congress acts to shore up the system.

Read: A 20% Social Security cut looms. Here's how warning Americans could make it even worse.

Taking on more investment risk may bring more exposure to stock-market swings, but it could also help people earn more money for retirement. The median amount American workers have saved for retirement is just $955, according to National Institute of Retirement Security.

BlackRock, which introduced its target-date investing in 1993, also said that artificial intelligence is "redefining the future of work and labor income, as it also transforms how we model, measure, and manage risks and opportunities."

The updated plan would increase stock exposure beginning 30 years before retirement by up to about 6%, depending on the vintage of the fund, the firm said in its filing. The equity exposure may be as high as 99% at 30 years before retirement and drop to 40% at retirement.

"It's a reasonable thing to do. We are living longer and working longer," said Bill Baynard, chief executive and co-founder of Novare Capital Management in Charlotte, N.C. "The premise is right. But it's a little bit of a question why they would make that decision now, at the end of a four-year bull market?"

The more aggressive plan will take effect in June, BlackRock said.

Read: Here's how Trump's 401(k)-style retirement accounts could work

In 2024, life expectancy at birth was 79 years for the total U.S. population, with female life expectancy of 81.4 and male life expectancy of 76.5, according to the Centers for Disease Control and Prevention.

Baynard said investors who use target-date funds should check the asset allocation to make sure they are comfortable with the risk profile.

"There's not one answer," he said. "I would caution investors in target-date funds to look at what's under the hood and see how it aligns with their risk tolerance. We don't all necessarily need to take on more risk. Not all of us can withstand that risk."

BlackRock was the third-largest manager of target-date products, behind Vanguard and Fidelity Investments, with $611 billion in such assets as of the end of 2025, according to Sway Research.

-Jessica Hall

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-05-26 0753ET