Any mutual fund that delivers regular income payments can be a retirement income fund. Dividend funds, balanced funds and bond funds are three compelling income options, although there are a range of other fund types that can provide retirees with cash flow.
Arranging a dependable stream of income is a key part of your retirement plan. Income should come from multiple sources, like Social Security, personal savings, annuities and even part-time work. Mutual funds that generate regular cash flow—so-called retirement income funds—can also play a big role.
Balanced Funds
A balanced fund owns a portfolio that includes both stocks and bonds. The fund aims to balance its potential growth by owning stocks with the stability and income generation of fixed-income assets.
Balanced funds have a target allocation between stocks and bonds, which is usually stated in the fund’s prospectus. The allocation can vary depending on the fund’s objectives and strategy. A very common target allocation is 60% stocks and 40% bonds.
Bond Funds
Bond mutual funds own fixed income assets, like government bonds, corporate bonds, municipal bonds, or a combination of these. When you invest in a bond, you are lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.
By investing in a broad portfolio including hundreds or even thousands of assets, bond funds spread your investment risk across different issuers, sectors, maturities and credit ratings. By holding a diversified portfolio, managers reduce the impact of any individual bond’s performance on the overall fund.
Dividend Funds
A dividend fund owns the stocks of companies that regularly pay dividends to their shareholders. They aim to generate income from the dividend payments, and also deliver increased value from capital appreciation of the stocks.
Public companies that pay dividends are typically mature and stable firms with a history of consistent payouts. Dividend funds often target stocks with relatively higher dividend yields, seeking to provide investors with attractive income potential.
FAQs
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
Where can I put money in 2023? ›
10 best investments in 2023
- High-yield savings accounts.
- Short-term certificates of deposit.
- Series I bonds.
- Short-term corporate bond funds.
- Dividend stock funds.
- Value stock funds.
- REIT index funds.
- S&P 500 index funds.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
What is the average 401k return in 2023? ›
Average annual 401(k) return: 4.9%
Many variables determine a 401(k)'s return, including the investments you choose, stock market performance and 401(k) fees.
How much money do you need to retire with $100000 a year income? ›
If you're looking for a single number to be your retirement nest egg goal, there are guidelines to help you set one. Some advisors recommend saving 12 times your annual salary. 12 Under this rule, a 66-year-old $100,000 per year earner would need $1.2 million at retirement.
How to save $10,000 in 2023? ›
If you're serious about meeting a big savings goal for 2023, put the savings process on autopilot. Arrange for $833 to bounce from your checking account over to your savings account at the start of each month so you're not tempted to spend that cash.
What is the safest place to keep your money 2023? ›
Where you should put your money in 2023
- High-yield savings accounts.
- Certificate of deposit accounts.
- Money market accounts.
- Other favorable places to stash your cash.
If you earned around $50,000 per year before retirement, the odds are good that a $300,000 retirement account and Social Security benefits will allow you to continue enjoying your same lifestyle.
Is $500000 enough to retire on at 70? ›
Certain types of housing may take your low fixed income into consideration, or you may choose to live with family or relocate to a less expensive part of the world. If you remain in good health and are careful with your money, $500k may be enough to see you through your retirement years.
What is the average 401k balance for a 70 year old? ›
The average 401(k) balance by age
| Age | Average 401(k) balance | Median 401(k) balance |
|---|
| 50-55 | $161,869 | $43,395 |
| 55-60 | $199,743 | $55,464 |
| 60-65 | $198,194 | $53,300 |
| 65-70 | $185,858 | $43,152 |
5 more rowsThe Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
Why is my 401k losing money 2023? ›
There are several reasons your 401k may be losing money. One reason is that the stock market is going through a down period. Another reason your 401k may be losing money is that you have invested in a specific company or industry that is not doing well. Finally, your 401k may lose money because of fees.
What is the average amount people have in their 401k when they retire? ›
Average 401(k) Balance by Age
| Age | Average 401(k) Balance | Median 401(k) Balance |
|---|
| 35 to 44 | $97,020 | $36,117 |
| 45 to 54 | $179,200 | $61,530 |
| 55 to 64 | $256,244 | $89,716 |
| 65 and older | $279,997 | $87,725 |
2 more rowsJul 3, 2023
5 Proven Ways to Protect Your Money in 2023
- Tip 1: Save more and earn more. ...
- Tip 2: Your bank account needs to be switched. ...
- Tip 3: Audit your memberships. ...
- Tip 4: Get your bills renegotiated. ...
- Tip 5: Don't forget to check your 401(k) ...
- Make sure you don't wait until it's too late.
Yes, if your money is in a U.S. bank insured by the Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you'll get your money back. Nearly all banks are FDIC insured.
Is 2023 a good year to invest? ›
2023 is a great time to start investing. But so was 2022. The key point is that over the long term, investments generally do grow in value, even if there is some early volatility. It is far better to invest now, whenever now happens to be, rather than waiting for some ideal future opportunity.
