Article from Money

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Money 70: The best mutual funds you can buy
Unlike the target-retirement funds designed for investors still planning for retirement, the stocks-bonds mix in the retirement income funds stays pretty much the same. They're done morphing; they're as conservative as they're going to get.
As for which fund family's retirement income target fund you might buy, we at Money Magazine have included the target funds of both T. Rowe Price and Vanguard on the Money 70, our elite list of recommended funds. That's not to say other fund families' target funds won't work for you.
But we liked T. Rowe's and Vanguard's funds because they charge very reasonable fees, and because we think the stocks-bonds mix in their funds make sense for investors who want their money to last throughout retirement.
The Vanguard fund keeps about 30 percent of its assets stashed in stocks. That should be enough to give someone your age a decent amount of growth, but also provide some principal protection. The fact that some 70 percent of the portfolio's assets are in bonds and cash means the fund should also produce a good level of income.
The T. Rowe Price retirement income target fund, on the other hand, takes a slightly more aggressive stance, keeping about 40 percent of its assets in stocks. It has more growth potential, but it will also likely be a bit more volatile than the Vanguard fund, although with 60 percent of its assets in bonds and cash, it's not as if we're talking a banzai approach here. (And this fund isn't anywhere near as volatile as the 2040 fund you're currently in.)
I think either of these funds would work just fine for you. It's really more a matter of personal choice. If you're really concerned about security of principal, go with the Vanguard fund. If you're willing to tolerate a little bounciness in the value of your portfolio in return for a shot at higher returns (and possibly more income in the future), then go with the T. Rowe fund.
One final note: Target funds work best when you have all or nearly all of our retirement assets in such a fund. If you also own other funds or have other investments, you'll want to make sure that the stocks-bonds mix for your entire portfolio doesn't stray too far from the target fund's mix. You can figure out the asset allocation of your retirement portfolio overall by going to Portfolio X-Ray tool in the Investment Planning Tools section on T. Rowe Price's site. (You must register to use the tool, but there's no charge.)
So check out the target retirement income funds I mentioned and then make your switch. The next time the stock market takes a nosedive - like it did Tuesday, dropping 416.02 points - you'll be glad you did.
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