Top 10 Best Recommended Mutual Funds for Retirement

Choosing the best mutual funds for retirement is a subjective exercise in investment selection — which is to say that each individual investor will have unique objectives they need to meet.

Therefore the best funds to buy in retirement will look different for each investor. However, retirees looking for the best funds for their nest eggs typically have one to three common investment objectives that need to be met during the stages of retirement.

These three objectives can be viewed as three separate buckets:

Preservation: Retired investors typically allocate a portion of their retirement assets to conservative mutual funds for the purpose of simply preserving assets for short-term needs. Income: Probably the greatest need in retirement for investors, income funds serve the purpose of income replacement by producing dividends and interest. This often is used to pay the bills. Growth: Too often overlooked and/or underestimated, the need for a growth bucket of mutual funds is significant because many retirees can expect to live for up to 30 years after leaving the workforce.

We’ve put together a list of the 10 best mutual funds for retirement keeping all three of these retirement objectives in mind. They cover a score of categories and are generally considered among the top options in their categories.

Best Mutual Funds for Retirement: Fidelity Capital & Income (FAGIX)

Expenses: 0.67%
Minimum Initial Investment: $2,500

One of the best high-yield mutual funds to buy on the market today is Fidelity Capital & Income (MUTF:FAGIX), a fairly inexpensive mutual fund in the high-income space.

Investors should note that, although the 3.9% yield and 9.9% lifetime average annual return are outstanding, the yield and return come with some risk.

The bond portfolio consists mostly of investment-grade and below-investment-grade issues. FAGIX also allocates about 20% of the portfolio to growth stocks, such as Skyworks Solutions Inc (NASDAQ:SWKS), Qorvo Inc (NASDAQ:QRVO) andAlphabet Inc (NASDAQ:GOOGL).

Best Mutual Funds for Retirement: Vanguard Managed Payout (VPGDX)

Expenses: 0.34%
Minimum Initial Investment: $25,000

Another Vanguard balanced fund to make our list of best mutual funds for retirement is Vanguard Managed Payout (MUTF:VPGDX).

As the name implies, the Managed Payout fund is an actively managed mutual fund that distributes a target percentage payout to shareholders. Portfolio managers target an annual distribution rate of 4%.

The holdings for VPGDX consist of a set of nine other Vanguard funds, including Vanguard Total Stock Market Index (MUTF:VTSMX), Vanguard Total International Stock (MUTF:VGTSX) and Vanguard Total Bond Market II (MUTF:VTBIX), plus a sliver of commodities. The idea is to provide broad exposure to stocks and bonds, both domestic and international. SHOW MORE

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