If one maxes out his Roth IRA starting from age 26, investing only into a vanguard target 2045 (lifecycle) fund, what amount can he expect to withdraw at retirement at age 59?
I did a quick check using a compound interest calculator: assuming a 5+k contribution is made annually, with 8% interest, the future value turned out to be 930k. How close is this number to the expected number for a lifecycle fund held for 33 years?
I don't think you have your head in the right space - you seem to be thinking of these lifecycle funds like they're an annuity or a pension, but they're not. They're an investment.
Specifically, they're a mutual fund that will invest in a collection of other mutual funds, which in turn invest in stock and bonds. Stocks go up, and stocks go down. Bonds go up, and bonds go down. How much you'll have in this fund next year is unknowable, much less 32 years from now.
What you can know, is that saving regularly over the next 32 years and investing it in a reasonable, and diversified way in a tax sheltered account like that Roth will mean you have a nice chunk of change sitting there when you retire.
The lifecycle funds exist to help you with that "reasonable" and "diversified" bit.They're meant to be one stop shopping for a retirement portfolio. They put your money into a diversified portfolio, then "age" the portfolio allocations over time to make it go from a high risk, (potentially) high reward allocation now to a lower risk, lower reward portfolio as you approach retirement. The idea is is that you want to shoot for making lots of money now, but when you're older, you want to focus more on keeping the money you have.
Incidentally, kudos for getting into seriously saving for retirement when you're young. One of the biggest positive effects you can have on how much you retire with is simply time. The more time your money can sit there, the better. At 26, if you're putting away 10 percent into a Roth, you're doing just fine. If that 5k is more than 10 percent, you'll do better than fine. (That's a rule of thumb, but it's based on a lot of things I've read where people have gamed out various scenarios, as well as my own, cruder calculations I've done in the past)
