If you’re planning to stop working around the middle of the next decade, you've probably stared at the Fidelity 2035 Target Date Fund on your 401(k) menu more than once. It looks easy. It's the "set it and forget it" option. But honestly, most people treat these funds like a magic black box where money goes in and a perfect retirement comes out. That’s a mistake.
The year 2035 isn't that far away anymore. We're talking about a decade and change.
If you're in this fund, you aren't just "investing in the market." You’re actually buying into a very specific philosophy about risk, age, and how much a person should lose when the market inevitably takes a nose-dive. Fidelity manages trillions, and their 2035 vintage—specifically the Fidelity Freedom 2035 Fund (FFTHX)—is one of the most popular ways Americans are trying to bridge the gap between their working years and their "golden" years.
The "Active" vs. "Index" Trap
First off, you’ve got to know which version you’re actually holding. Fidelity is kinda unique because they offer two main flavors of the same meal. There’s the Fidelity Freedom 2035 Fund (FFTHX), which is actively managed. This means highly paid humans are picking stocks and trying to beat the market. Then there’s the Fidelity Freedom Index 2035 Fund (FIHFX).
The index version just follows the math. It’s cheaper. Much cheaper.
The expense ratio on the active fund is usually around 0.70%, while the index version can be as low as 0.12%. That might sound like pennies. It isn't. Over twenty years, that fee gap can eat a massive chunk of your actual buying power. You're basically betting that the Fidelity managers are smart enough to earn back their high fees by outperforming the S&P 500 and international markets. Sometimes they do. Often, they don’t.
How the Glide Path Actually Works
The "glide path" is just a fancy term for how the fund changes its personality as you get older. Right now, the Fidelity 2035 Target Date Fund is in its "transition" phase. It’s moving from an aggressive teenager to a cautious middle-aged adult.
Basically, the fund starts with a ton of stocks—maybe 90% or more when the target date is thirty years away. As 2035 gets closer, it starts selling those stocks and buying "safer" stuff like bonds and short-term debt. The goal? To make sure that if the stock market crashes in 2034, you don't lose half your net worth the year before you retire.
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Fidelity’s glide path is famously more aggressive than some of its competitors like Vanguard. They tend to hold onto more equities (stocks) for longer. This is great when the market is ripping higher. It feels like a punch to the gut when the market enters a bear cycle.
Current allocations for the 2035 fund generally hover around 70-75% in equities. That’s a lot of exposure for someone who wants to quit their job in nine or ten years. If you’re a person who panics when you see red on your screen, this fund might actually be too "hot" for you, even if the date on the label matches your retirement year.
The International Diversification Problem
One thing that catches people off guard is how much international exposure Fidelity bakes into these funds. It’s not just US companies like Apple and Amazon. You’re owning pieces of companies in Europe, Japan, and emerging markets.
For the last decade, US stocks have basically dunked on the rest of the world. Because of that, some investors look at their Fidelity 2035 Target Date Fund and complain that it's underperforming the S&P 500. Well, yeah. It’s supposed to. It’s diversified.
If the US dollar weakens or the domestic tech bubble finally pops, those international holdings are your insurance policy. But it's a drag on performance during US bull markets. You have to decide if you’re okay with that "safety" through diversification or if you’d rather just bet on the home team.
Inflation and the Hidden Risk
We don't talk enough about "longevity risk." That’s the risk of not dying soon enough.
If you retire in 2035, you might need that money to last until 2065. If the fund gets too conservative too quickly—meaning it moves all your money into bonds—inflation will eat your lunch. Bonds often don't keep up with the rising cost of eggs, health insurance, and Netflix subscriptions.
Fidelity knows this. Their 2035 fund is designed to keep growing even after you hit the target date. It doesn't just turn into a pile of cash on January 1, 2035. It continues to shift for another 10 to 15 years until it reaches a "static" allocation. This is called a "through" glide path rather than a "to" glide path.
The Real Cost of Convenience
Let’s talk about the "Fund of Funds" structure. You aren't actually buying stocks. You're buying a fund that buys other Fidelity funds.
It’s like a Russian nesting doll of finance.
Inside your 2035 fund, you'll find bits and pieces of the Fidelity Series Emerging Markets Opportunity Fund, the Fidelity Series Small Cap Opportunities Fund, and a dozen others. It’s incredibly complex under the hood. The benefit is that you get professional rebalancing. If stocks go up, the managers sell some to buy bonds, keeping your risk level steady. If you did this yourself, you’d probably forget. Or you’d get greedy and refuse to sell your winners.
The downside? You have zero control. You can't decide to "sit this one out" if you think the tech sector is overvalued. You're strapped into the roller coaster.
Is it Right for You?
Honestly, most people shouldn't pick their fund based only on the year.
If you have a massive pension waiting for you, you can afford to be more aggressive. You might want the 2040 or 2045 fund instead, even if you’re retiring in 2035. Conversely, if this 401(k) is all you have, the Fidelity 2035 Target Date Fund might be exactly the right amount of "boring" for you.
You also have to look at your tax situation. These funds are generally great in a 401(k) or an IRA. They are usually terrible in a regular taxable brokerage account. Why? Because the managers are constantly buying and selling things inside the fund, which creates "capital gains distributions." You end up paying taxes on gains you didn't even realize you had.
Keep the target date funds in your retirement accounts. Use simple index funds or ETFs in your "fun" brokerage account.
Practical Next Steps for 2035 Investors
Don't just let the fund sit there without checking the vitals.
First, log into your portal and check the Expense Ratio. If it’s over 0.50%, call your HR department or your plan administrator. Ask them if the "Index" version of the 2035 fund is available. Switching from the active version to the index version is the easiest way to "earn" an extra 0.5% every year without taking any extra risk.
Second, assess your total "Stock to Bond" ratio. If you have other accounts—like a Roth IRA or a spouse's 401(k)—look at the whole picture. If your spouse is 100% in stocks and you’re in a 2035 fund, your household might be more aggressive than you think.
Third, look at the "Fidelity Freedom" name carefully. If the word "Index" isn't in the title, you are in the actively managed version. Decide if you trust the managers enough to pay their salary.
Finally, run a simple projection. Based on your current balance and contribution rate, will the 2035 fund get you to your number? Because the fund gets more conservative over time, your "average" return in the 2030s will likely be lower than it was in the 2020s. Don't assume 10% returns forever. Use a more realistic 6% or 7% for your long-term planning to account for the bond heavy-shift coming your way.
The Fidelity 2035 Target Date Fund is a solid tool, but it's a hammer, not a house. You still have to build the rest of the structure yourself. Check your fees, understand the international drag, and make sure the glide path matches your actual stomach for risk.