The 7 best Vanguard funds for your retirement
Published: June 26, 2025 / Stock Analysis
Here's something that might surprise you: A 35-year-old who invests just $300 monthly in the right Vanguard fund could retire with over $1.2 million by age 65. Yet most DIY investors spend more time researching their next smartphone purchase than choosing the funds that will determine whether they can actually afford to retire.
If you're staring at Vanguard's 65+ fund options feeling overwhelmed, you're not alone. The good news? You really only need to understand about seven funds to build a rock-solid retirement portfolio. The even better news? Vanguard's legendary low fees mean more of your money stays invested and working for you instead of padding fund managers' pockets.
Why Vanguard Dominates the Retirement Game
Vanguard didn't become the world's second-largest asset manager by accident. Their unique ownership structure means they're owned by their funds, which are owned by you—the investor. This alignment of interests translates into expense ratios that are often 5-10 times lower than industry averages.
When you're investing for 30+ years, those fee savings compound dramatically. A 0.04% expense ratio versus a 0.75% industry average could mean an extra $200,000 in your retirement account over three decades.
The Core Four: Vanguard's Retirement Powerhouses
Target Retirement Funds: The "Set It and Forget It" Champions
Vanguard Target Retirement 2060 Fund (VTTSX) - Expense Ratio: 0.08% - Perfect for investors in their 20s and 30s - Automatically adjusts allocation as you age - Currently 90% stocks, 10% bonds
Vanguard Target Retirement 2050 Fund (VFIFX) - Expense Ratio: 0.08% - Ideal for those planning to retire around 2050 - Gradual shift from aggressive to conservative over time
These funds are like having a professional portfolio manager who never sleeps, constantly rebalancing your investments and shifting from growth-focused to income-focused as retirement approaches.
Vanguard Funds With Diversification
Vanguard Total Stock Market Index Fund (VTSAX) - Expense Ratio: 0.04% - Owns essentially the entire U.S. stock market - Over 4,000 holdings from mega-caps to small companies - 10-year average annual return: ~12%
This fund is the backbone of many successful retirement portfolios. You're literally buying a slice of American capitalism, and historically, that's been a winning bet.
Vanguard Total International Stock Index Fund (VTIAX) - Expense Ratio: 0.11% - Provides global diversification beyond U.S. markets - Covers developed and emerging markets worldwide - Essential hedge against U.S.-only concentration risk
The Income Generators: High-Quality Dividend Funds
Vanguard Dividend Appreciation Index Fund (VDADX) - Expense Ratio: 0.06% - Focuses on companies with 10+ years of consecutive dividend increases - Quality over yield approach - Perfect for those seeking growing income streams
Vanguard High Dividend Yield Index Fund (VHYAX) - Expense Ratio: 0.06% - Targets companies with above-average dividend yields - Current yield: ~2.8% - Ideal for investors prioritizing current income
Bond Funds: Best for Stability
Vanguard Total Bond Market Index Fund (VBTLX) - Expense Ratio: 0.05% - Broad exposure to U.S. investment-grade bonds - Provides stability and income - Natural hedge against stock market volatility
Building Your Vanguard Retirement Portfolio
| Fund Name | Ticker | Expense Ratio | Best For | Risk Level |
|---|---|---|---|---|
| Target Retirement 2050 | VFIFX | 0.08% | Hands-off investors | Moderate-High |
| Total Stock Market | VTSAX | 0.04% | U.S. equity exposure | High |
| Total International | VTIAX | 0.11% | Global diversification | High |
| Dividend Appreciation | VDADX | 0.06% | Growing income | Moderate |
| High Dividend Yield | VHYAX | 0.06% | Current income | Moderate |
| Total Bond Market | VBTLX | 0.05% | Stability/Income | Low |
| REIT Index | VGSLX | 0.12% | Real estate exposure | Moderate-High |
Three Portfolio Strategies That Actually Work
The "Keep It Simple" Approach
- 70% Target Date Fund (VFIFX or appropriate year)
- 20% International Stocks (VTIAX)
- 10% Bonds (VBTLX)
The "Three-Fund Portfolio" Classic
- 60% Total Stock Market (VTSAX)
- 20% International Stocks (VTIAX)
- 20% Bonds (VBTLX)
The "Income-Focused" Strategy (Ages 50+)
- 40% Total Stock Market (VTSAX)
- 20% International Stocks (VTIAX)
- 20% Dividend Appreciation (VDADX)
- 20% Bonds (VBTLX)
Common Mistakes Made by DIY Investors
Overthinking Fund Selection You don't need 15 different funds. Three to five quality Vanguard funds can cover all your bases effectively.
Chasing Performance Last year's winner is often next year's loser. Stick to your allocation and rebalance annually looking at the performance in the last few years.
Ignoring International Diversification The U.S. stock market represents about 60% of global market capitalization. Don't miss out on the other 40%.
When to Adjust Your Vanguard Strategy
Your fund selection should evolve with your life stages:
In Your 20s-30s: Go aggressive with target-date funds or 80-90% stocks
In Your 40s: Start adding more stability with balanced approaches
In Your 50s: Shift toward dividend-focused and bond funds
In Retirement: Prioritize income-generating funds while maintaining some growth
Key Takeaways for Vanguard Success
• Start with a target-date fund if you're unsure—it's designed to do the heavy lifting for you
• Keep expense ratios under 0.20% (Vanguard makes this easy)
• Diversify globally with international funds, don't just buy U.S. stocks
• Rebalance annually, not monthly—stay disciplined, not hyperactive
• Consider dividend funds as you approach retirement for steady income
The Bottom Line
Vanguard's fund lineup offers everything you need for retirement success, without the complexity or high fees that plague many investment options. Whether you choose the simplicity of a target-date fund or build your own three-fund portfolio, the key is starting now and staying consistent.
The difference between a comfortable retirement and working until you're 80 often comes down to making smart fund choices in your 30s and 40s. With Vanguard's low-cost, diversified options, you're already ahead of 90% of investors who are paying high fees for actively managed funds that rarely beat the market.
Remember: Time in the market beats timing the market, and low fees beat high fees. Vanguard delivers both.
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