A recent article in Fiduciary News by Christopher Carosa is titled “Are Target Date Funds a Ticking Time Bomb?”  I believe the answer is “yes.”  I believe the article essentially reaches the same conclusion.  What’s the problem?  The main problem is that these funds are largely invested in long-term bonds for people close to retirement age, and interest rates are at historical lows.  Thus, if and when interest rates increase, the bond values (and account values) will substantially decrease.  Many believe interest rates will increase beginning later on this year.   (This is no secret.)  The article notes:  “With the end of a historic period of low interest rates rapidly approaching, the consequences of investors continuing to be ill-informed about the inherent risks of target date funds are simply too grave.”  Not surprisingly, the U.S. DOL “signed off” on these funds a few years ago.  The DOL has been known to do “180s” in the past.  A tremendous amount of 401(k) funds are now invested in target date funds.