Which of the following describes the glide path for investments in retirement funds?

The glide path in the context of retirement investment funds is defined by a strategic approach where the level of investment risk systematically decreases as the target date approaches. This concept is particularly relevant in target-date funds, which are designed to align with the retirement date of the investor.

As individuals get closer to retirement, the glide path helps to preserve capital and reduce exposure to market volatility. Initially, when an investor is further from retirement, the portfolio may be heavily weighted towards equities, which, while riskier, have the potential for higher returns. However, as the target date nears, the investment shifts toward more stable and less volatile asset classes, like bonds, to protect the accumulated savings.

This systematic reduction in risk is paramount for ensuring that individuals have adequate funds available at or around their retirement date, minimizing the risk of market downturns affecting their retirement savings.