Pros: You get diversification in a single fund and automatic adjustment of your asset allocation as you approach your target year. "The advantage of the target-date fund is that as you're getting closer to using the money, then they will be gradually scaling back the risk, which is what you want to do," says Tyson.

However, some funds get conservative faster than others, so people need to look at not just the current asset allocation but also how it changes over time, says Greg Carlson, a fund analyst at Morningstar. "They need to think about where that fits in with their own risk tolerance and maybe their expectation for returns."

Cons: Life-cycle funds can charge high fees that are worth avoiding whenever possible. "You'd want to be down around an expense ratio of 1 percent or less, if you could," says Gail MarksJarvis, author of "Saving for Retirement (Without Living Like a Pauper or Winning the Lottery)."

Not every target-date fund offers quality diversification. People should examine the quality of the underlying funds and how they've performed. Target-date funds are usually funds of funds, meaning they hold other mutual funds in their portfolios, often from the same firm. The tenure of the managers on those underlying funds matters, too. "You're going to be holding the target-date fund for a long time. You don't want a target-date fund where the underlying funds are changing managers all the time," says Carlson.

These funds might also skimp on international stocks. "I think the typical target-date fund has something like 20 percent overseas, and that's on the light side," says Carlson. "I would shoot for 30 percent or even more, maybe, because there are a growing number of really good businesses outside the United States. You're really limiting your opportunities if you don't have much exposure to foreign stocks."