Tactical Target Date Funds

We propose target date funds modified to exploit stock return predictability driven by the variance risk premium. The portfolio rule of these tactical (TTDFs) is extremely simplified relative optimal one, making it easy implement and communicate investors. show that saving for retirement in TTDFs generates economically large welfare gains, even after we introduce turnover restrictions transaction costs, taking into account parameter uncertainty. This also appears be uncorrelated with individual household risk, suggesting households are a prime position it. paper was accepted Tomasz Piskorski, finance.