The blog post referenced goes on to claim his analysis of TDFs is not an academic exercise. He then notes all the flaws with such investment vehicle. But as you can see below, he also acknowledges their value and that’s the key.
The blog linked below is for the folks in the FIRE movement, they are going to retire really early and be financially independent when they do. Hopefully they are sophisticated investors and planners, they know Monte Carlo means more than a small kingdom.
HOWEVER, for the great majority of 401k investors who may not be sure of the difference between a stock and a bond and who are saving long-term for retirement, while perhaps not perfect, the Target Date Fund is the best option which is why they are often used as the default option for automatic enrollment. That and fiduciary safety for the plan sponsor.
First, in all fairness, I want to point out some of the features I really appreciate about target-date funds. TDFs are an easy, hands-off life-cycle asset allocation tool for people who, without any other guidance, might just “invest” their 401(k) savings in the money market option at a 0.1% annual yield. Or even worse, without the TDF option in their 401(k) plan, people might capitulate altogether and not participate at all in the retirement plan for fear of “doing something wrong.”
I also like the whole TDF philosophy because it has made it a lot more palatable for a lot of employers to “auto-enroll” employees in their 401(k) and direct those contributions. Research has shown that participation rates increase if new employees are enrolled by default rather than employees having to spend the effort to sign up. It’s almost hard to believe that a lack of participation is due to laziness, essentially. And more participation in companies with auto-enrollment is due to people being too lazy to opt-out.