Suze Orman, host of the Women & Money podcast, has been blunt about the most popular default option in American 401(k) plans. Her position: “When people ask me whether target-date funds are a good investment, my answer is simple: They’re built on assumptions I don’t agree with. Target-date funds assume you should invest based on your age. You shouldn’t. You should invest based on your needs and what’s happening in the economy.”

If you were auto-enrolled in your 401(k), the assumption she is attacking is probably sitting in your account right now. A glide path that mechanically shifts you into bonds as you near retirement can lock in losses when rates rise, at the exact moment you can least afford it.

The structural complaint holds up

Target-date funds set your stock-to-bond ratio using one variable: years to your stated retirement date. They do not look at the yield curve, your pension status, your spending needs, or whether bonds are a good deal that month. They buy bonds whether bonds yield 1% or 5%.

Why that matters now: the 10-year Treasury yield sits near 4.6%, near the high end of its 12-month range and well above the 4.0% low set in February. The Fed funds rate is near 3.8%, down from a 4.5% peak last September. CPI sits at 332.4, up from 320.6 a year ago.

The bond math

When yields rise, the price of existing bonds falls. A typical intermediate bond fund with a duration of about six years loses roughly 6% of principal value for every 1 percentage point rise in rates. A 2030 target-date fund with half its money in bonds does not escape that math.

Concrete scenario: a 62-year-old with $500,000 in a 2030 target-date fund at a 50/50 split. Long rates climb another 100 basis points over the next year. The bond half loses around 6%, roughly $15,000 of principal, before any coupon income offsets it. That same investor could buy a 10-year Treasury today yielding nearly 4.6% and hold to maturity for a known return. The glide path does not make that swap.

Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement

Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.

Stack inflation on top. A 5% annual increase compounded over five years feels like roughly 25% to the person paying the grocery bill. A bond-heavy retiree whose coupons trail that pace is losing purchasing power every month.

The variable that changes everything

Suze’s critique is sharpest for people close to retirement. A 35-year-old in a 2055 fund holds roughly 90% stocks. The bond drag is small, time absorbs the swings, and auto-rebalancing works.

A 60-year-old in a 2030 fund faces a different problem. Half the portfolio is interest-rate sensitive, and there is no 20-year recovery window. If Social Security and a pension already cover fixed expenses, the remaining account is long-dated money for a 30-year retirement, which arguably wants more stocks at 65, not fewer.

The real variable is the gap between what you need from this account and when you need it.

What to actually do

1. Pull up your target-date fund’s current allocation. Vanguard and Fidelity publish holdings on their fact sheets. Note the bond percentage and the average duration. If duration is above five years, you know your interest-rate exposure.

2. List your guaranteed income. Use the SSA.gov estimator for Social Security, add any pension or annuity. Subtract that from expected retirement spending. The gap is what this portfolio actually has to cover.

3. If the gap is small and far away, the target-date fund is probably fine. Watch the expense ratio. Vanguard’s run around 0.08%, while some 401(k) target-date options charge over 1%, a difference that compounds into six figures over a career.

4. If the gap is large or near, build the allocation yourself with three low-cost index funds: a total US stock fund, a total international stock fund, and a short-duration Treasury fund or ladder capturing today’s 4.6% yields.

5. Rebalance once a year on a set date. That is the only piece of the target-date fund’s job worth automating.

Suze’s headline is provocative. The mechanic underneath it is correct. A fund that ignores the price of the asset it is buying is a default setting, not a strategy.

Data Shows One Habit Doubles American’s Savings And Boosts Retirement

Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.

And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.