Target date funds can be a great way to put your retirement investing on auto-pilot; they’re designed to reduce your exposure to stocks as your targeted year for retirement approaches. But that only works if the riskier equity exposure actually is reduced. The Washington Post reports that the U.S. Senate Special Committee on Aging is pushing for regulation of target funds, including their composition and how the funds are described in advertising. Committee members are concerned that some target date funds are more heavily invested in stocks than investors would expect as retirement dates approach:

“Last year, too many 2010 target-date funds reported astounding losses, considering their participants were on the brink of retirement,” said Sen. Herb Kohl (D-Wis.), chairman of the committee. “It’s clear that a number of these companies need to reassess their definition of ‘conservative.’ “

The committee will hold hearings this week on the impact of the financial crisis on the ability of baby boomers to retire.

Related posts:

1. Target date funds offer cruise control, but watch out for potholes
2. Target date funds get better and bigger, report finds
3. Why target date funds face heat and probable reforms
4. Why target date funds are faring better this time around
5. Facing financial stress? Resist the urge to raid your 401(k)

Tags | 401(k), IRA