Payout Funds

AS AN ALTERNATIVE to income annuities, some mutual fund companies have rolled out managed payout funds. Historically, mutual funds have been geared toward investors who are amassing money for financial goals, notably retirement. Managed payout funds represent an attempt by fund companies to cater to investors who are no longer saving and instead are looking to generate regular income. But the funds have not proven popular. Indeed, in 2023, Vanguard Group merged its payout fund out of existence.

Still, some payout funds remain. Charles Schwab’s lineup of monthly income funds comes in three flavors, each of which targets a different combination of income and growth. If you buy the fund that generates the most income, you should expect lower long-run growth. Meanwhile, Fidelity Investments offers a series of managed retirement funds, with the notion that investors should buy the fund whose date is closest to the year they turn age 70.

Keep in mind that these funds don’t provide guaranteed lifetime income, like Social Security or an income annuity. But they do offer a way to generate additional retirement income, while maintaining control over your assets and possibly allowing you to bequeath at least part of the money to your children or other family members.

Next: Spending Home Equity

Previous: Immediate Variable

Notify of
Inline Feedbacks
View all comments

Free Newsletter