Homepage / Investment / This fund helps keep retirees from running out of money
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


This fund helps keep retirees from running out of money

Many retirees discover that saving for their golden years was the easy part. The challenge is making sure their spending rate avoids depleting their nest egg.

A growing movement in the mutual fund world is working on solutions for that conundrum. While just a handful of so-called retirement income funds are currently available, financial advisors say the lineup of offerings is worth exploring.

“They can be a good solution for do-it-yourself or [nonprofessional] investors,” said Dana Anspach, a certified financial planner and CEO of Sensible Money.

“If you don’t know how to allocate your mix of investments or don’t have a distribution plan, these funds can put that on autopilot for you,” she said.

Basically, retirement income funds — also called managed payout funds — are actively managed portfolios of mutual funds. While their investment strategies differ, their goal is the same: to help you avoid spending down your assets too quickly.

With expense ratios ranging from about 0.34 percent to more than 1 percent, these portfolios also automatically distribute income to shareholders at rates intended to assure sustainability over time. For instance, Vanguard’s Managed Payout Fund aims to give investors a yearly withdrawal rate of 4 percent.

They also are essentially offshoots of target-date funds, whose assets automatically shift to more conservative investments as you approach retirement. With $996 billion in assets, these set-it-and-forget-it funds have ballooned in popularity over the last decade.

In contrast, the handful of retirement income funds on the market has remained in the shadows of their brethren.

“The first wave of these came right around the market crisis [of 2008-2009] so they didn’t gain a lot of traction,” said Jeff Holt, associate director of manager research at Morningstar. “In the last two or three years there’s been some renewed interest in retirement income.”

Most recently, T. Rowe Price started the Retirement Income 2020 Fund. As its name suggests, it is aimed at investors nearing the end of their working days.

“There’s a need out there for retirees to [manage] their income and it’s a challenge we’re addressing,” said Sebastien Page, head of T. Rowe’s asset allocation group.

While interest in the company’s new fund won’t be available until its next quarterly report is filed with regulators, its competitors’ assets are nothing to boast about. Collectively, the funds claim only a few billion of the $15.7 trillion invested in mutual funds.

“I think fund managers are testing the water to see what will resonate with investors,” Holt said.

The problem of managing retirement income has become more acute as baby boomers retire at an estimated rate of 10,000 per day. The Insured Retirement Institute’s latest report on the 74.9 million-strong generation shows that the number of Americans over the age of 65 has risen more than 18 percent since 2011.

“Retirement income is a bigger deal than any other part of financial planning because at some point you no longer have the ability to earn more money,” said Kathryn Hauer, a CFP with Wilson David Investment Advisors. “You have to manage what you have very carefully.”

Some retirees in search of guaranteed income end up purchasing annuities. These complex contracts tend to be more expensive than other investments and typically cannot be liquidated within preset times — lasting years, typically — without paying hefty surrender charges. Nevertheless, the income guarantee makes them worth the price for some investors.

Although retirement income funds come with no guarantees like annuities do, they could serve as an alternative for other reasons.

“People often will buy an annuity to minimize volatility in their investments, but it’s an expensive way to do it,” Hauer said. “So these funds could be an alternative.”

Retirement income funds have varying minimum investments. For example, T. Rowe’s fund requires at least $25,000, as does Fidelity Investments’ Income Replacement Funds. Charles Schwab‘s Monthly Income Funds have a $100 minimum.

While they are designed to be an all-in-one option, they also could be part of a larger strategy.

“Some investors might see our fund as a complete solution, in combination with Social Security,” T. Rowe’s Page said. “For others, it could be a way to add income to their overall portfolio. It can work well as a building block.”

Holt cautioned that before putting all of your retirement savings in one of these funds, make sure you trust the investment management team.

“You’d need to have a lot of confidence in the investment strategy to put all of your money in it,” Holt said.

Source: Investment Cnbc
This fund helps keep retirees from running out of money

Comments are closed.