A. A target date retirement fund fits many investors, because it automatically adjust investment portfolio to reflect the target retirement year and the associated investment objective. However, it is not without shortcomings.
Its main drawback is higher expenses - based on Morningstar estimates, the average annual expense of a target date retirement fund is 0.91% in 2012, a lot higher than index funds.
As an investor, you can quite easily replicate the components of the target date retirement fund by allocating the right % of your retirement investment to the different domestic stock funds, international stock funds, bond funds, etc. All you have to do is to read the target date fund's prospects and keep close track of its asset allocations each year, then invest on your own. Of course you will need to do some homework, but you will save money year after year.
One more important thing to note - do not treat target date fund as one option, like other fund choices, and allocate your 401(k) money among target date fund and other funds at the same time. If you decide to go with the target date retirement fund approach, put all your savings into it, otherwise, it will defeat the purpose of automatic portfolio adjustment towards your retirement date!