"Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds."
Yeah, no. Mutual funds, even those by Vanguard, have high expense ratios, and there is absolutely no evidence that they outperform their equivalent index funds. Jack Bogle, founder and retired CEO of Vanguard, himself recommends index funds over mutual funds for this reason.
And, the idea of the target funds is that they become more conservative as you reach the target. The pure index funds do not. So they are basically index funds with portfolio rebalancing.
https://institutional.vanguard.com/VGApp/iip/site/institutio...
There's also the fact that not everyone's 401k is offered through Vanguard. For example, if you're stuck with Fidelity like I am, then you will definitely need to avoid their mutual funds and choose their index funds instead. (With 401k, you cannot pick a fund outside of the broker that manages it.)
Yes, it's slightly lower if you buy all the composing Vanguard index funds individually, but for an index card comment, I'd say it's good enough.
(Minor quibble: index funds can be mutual funds or ETFs)
* Pay attention to fees. Avoid actively managed funds.
http://www.forbes.com/sites/baldwin/2013/06/05/the-trouble-w...