Portfolios poised to get the most out of retirement
The American Funds Retirement Income Portfolio Series can help you address the income and longevity needs of retirees while affording you time to focus on your practice. Discover how years of extensive fundamental research, a long-term track record, and the skilled investment experience of our Portfolio Solutions Committee come together to give you three turnkey portfolios — Conservative, Moderate and Enhanced — that help you focus on growth.
Focused
Portfolios seek to support different withdrawal rate ranges while maintaining as much of a retiree's initial investment as possible.
Flexible
Portfolios differ in their mix of equities and bonds, allowing for variation in withdrawal rates and risk tolerances.
Actively monitored
Portfolios benefit from the ongoing research and attention of the Portfolio Solutions Committee.
Overview
Retirees may be concerned with maintaining their lifestyles in retirement as they take withdrawals from their investments. The American Funds Retirement Income Portfolio Series strives to:
- Be a withdrawal source for a retiree’s lifestyle (or discretionary) needs in concert with other investments and sources of income in a retiree’s portfolio.
- Preserve as much of the initial investment as possible, even while taking regular withdrawals.
Translating need and risk into withdrawal rate ranges
The Portfolio Solutions Committee used extensive research and modeling to determine the suggested annual withdrawal rate ranges for each of the three portfolios (as of April 25, 2024).
*Risk of loss, in this case, is defined as an increased exposure to equities, which can lead to greater volatility in the portfolio and potentially impact both withdrawal rates and whether overall assets invested will decline over time.
Each fund of funds is designed to address varying income needs and risk tolerances, and each has a suggested withdrawal rate range.
The suggested annual withdrawal rate ranges for the portfolios:
- Were determined by the Portfolio Oversight Committee, the predecessor to the Portfolio Solutions Committee, based on their experience and in-depth knowledge of the underlying funds, as well as the extensive research and computer simulations used to create each portfolio.
- Were based on income and capital gain expectations — taken from both historical data as well as market projections — for each of the portfolios.
- Are suggestions only, and should be evaluated over time. These ranges are a starting point; the actual rate should be determined on an individual basis by the financial professional and retiree, and should be adjusted to maintain sustainability in various market conditions. In addition, differences in the portfolio returns, inflation (or deflation) and interest rates over time may prompt the Portfolio Solutions Committee to change the suggested withdrawal rate ranges.
- May include part of the investor’s principal, to the extent the income earned by the portfolio (in dividends and bond income) is less than the withdrawal amount. The portfolios are designed to accommodate this, and will seek to grow assets over time as well as provide withdrawals, though there is no guarantee the portfolios will support a given withdrawal rate in all market environments.
- Should be determined by individual investors as one part of their total retirement income picture, including Social Security or other sources of guaranteed or interest income. These portfolios are designed to address lifestyle, or discretionary, expenses in retirement — not necessarily basic living expenses.
Investment approaches for every genre.
Portfolios
American Funds Retirement Income Portfolio — Conservative
Strives for the accomplishment of three investment objectives: current income, long-term growth of capital and conservation of capital, with an emphasis on income and conservation of capital.
- 3.00%–3.75% suggested annual withdrawal rate range†
†Percent of initial investment.
Underlying fund allocations are as of April 25, 2024.
American Funds Retirement Income Portfolio — Moderate
Strives for the balanced accomplishment of three investment objectives: current income, long-term growth of capital and conservation of capital.
- 3.25%–4.00% suggested annual withdrawal rate range†
†Percent of initial investment.
Underlying fund allocations are as of April 25, 2024.
American Funds Retirement Income Portfolio — Enhanced
Strives for the accomplishment of three investment objectives: current income, long-term growth of capital and conservation of capital, with an emphasis on income and growth of capital.
- 3.50%–4.25% suggested annual withdrawal rate range†
†Percent of initial investment.
Underlying fund allocations are as of April 25, 2024.
Features and benefits
We built the American Funds Retirement Income Portfolio Series to help address the needs of investors nearing or in retirement.
These funds of funds are:
- Focused on withdrawals and longevity. They seek to support different withdrawal rate ranges while maintaining as much of a retiree’s initial investment as possible.
- Flexible. They differ in their mix of equities and bonds, allowing for variation in withdrawal rates and risk tolerances.
- Actively monitored. They benefit from the ongoing research and attention of the Portfolio Solutions Committee.
Portfolio oversight
The American Funds Retirement Income Portfolio Series is monitored by the Portfolio Solutions Committee — investment professionals who collectively have deep experience managing funds to pursue investor objectives.
Retirement income portfolios are complex. The need for withdrawals often conflicts with a desire for capital preservation. Stock and bond market interplay — once reliable for its inverse correlation — has become more difficult to navigate in recent years.
That’s why the Portfolio Oversight Committee, the predecessor to the Portfolio Solutions Committee:
- Performed exhaustive proprietary research using historical and forward-looking analytics.
- Deployed data weighted for both even and extreme market conditions.
- Relied on their deep experience in managing the underlying American Funds.
The seven seasoned investment professionals in the Portfolio Solutions Committee offer:
- Experience. The committee averages 32 years of investment industry experience, as of December 31, 2023.
- Familiarity. They know the underlying funds well, some as managers.
- Oversight. They monitor the portfolios closely and more intensely in times of volatility.
Other resources
Why retirement expectations may miss the mark
This article summarizes findings and insights into its ongoing program of research into retirement income trends and spending patterns.
Portfolio construction
Learn why focusing on real-life goals and real-world risks should be at the core of how you construct portfolios.
Supporting products and solutions
The order of the underlying funds is based on the Capital Solutions Group's assessment of each fund's volatility, based on the fund's historical standard deviation, objective and other factors.