American Funds Retirement Income Portfolio Series℠
The American Funds Retirement Income Portfolio Series℠ consists of three managed portfolios — Conservative, Moderate and Enhanced — that can help advisors construct tailored portfolios that address the income and longevity needs of retirees.
Made up of American Funds, these portfolios:
- Were created by the American Funds Portfolio Oversight Committee — a seven-member team of senior investment managers — based on extensive research and their in-depth knowledge of the underlying funds.
- Seek to support varying withdrawal rate ranges and risk tolerances while maintaining as much of a retiree’s initial investment as possible.
- Were designed to be a part of a broadly diversified retirement income portfolio.
Retirees may be concerned with maintaining their lifestyles in retirement. In addition, they may want to be assured of asset growth 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 American Funds Portfolio Oversight Committee used extensive research and modeling to determine the suggested annual withdrawal rate ranges for each of the three portfolios.
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, 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 advisor 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 Oversight 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 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.
American Funds Retirement Income Portfolio — ConservativeSM
With significant allocations to The Bond Fund of America® and U.S. Government Securities Fund®, this portfolio focuses more on preservation of capital, while still seeking to provide current income.
- 2.50%–3.00% suggested annual withdrawal rate range*
- 35%–45% equity allocation range
American Funds Retirement Income Portfolio — ModerateSM
The portfolio includes several fixed-income funds, but the allocation is weighted more toward income-focused funds like Capital Income Builder® and The Income Fund of America®.
- 2.75%–3.50% suggested annual withdrawal rate range*
- 40%–60% equity allocation range
American Funds Retirement Income Portfolio — EnhancedSM
With greater allocations to income-focused equity funds, this portfolio has more potential upside over the long term, but will likely result in greater volatility.
- 3.00%–4.00% suggested annual withdrawal rate range*
- 55%–75% equity allocation range
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 American Funds Portfolio Oversight Committee.
The American Funds Retirement Income Portfolio Series is available in F-1, F-2, F-3, A, C and all R share classes (third-party platforms only; not in PlanPremier and RecordkeeperDirect).
The American Funds Retirement Income Portfolio Series was developed and is monitored by the American Funds Portfolio Oversight Committee — investment professionals who have a long history of successfully 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 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.
These seven seasoned American Funds portfolio managers offer:
- Experience. The committee averages 27 years of industry experience.
- Familiarity. They know the underlying funds well, many as managers.
- Oversight. They monitor the portfolios closely and more intensely in times of volatility.