Editor’s note: This is a transcript of the audio file.
To some people, thinking about investments is the height of tedium. To others, the topic is too intimidating or complex to master. It’s particularly daunting for those close to retirement who have no pension to look forward to, and who need to convert their investments into income.
That’s where a new type of target date funds, known as retirement income funds can come in handy.
I’m Sheyna Steiner with the Bankrate.com personal finance minute.
Just like they sound, retirement income funds focus on providing income in retirement. The funds are fairly new, most having sprung up in the past 3 or 4 years. According to the mutual fund research company Lipper, retirement income funds must provide appropriate asset allocations for retired investors while paying them regular distributions.
There are two types of these new funds, ones that pay out in perpetuity and non-perpetuity. That means that the mutual funds can either have a dated expiration, similar to target date funds used in the accumulation phase of retirement planning, or they can attempt to make payments for an indefinite amount of time, maybe even forever.
To learn more about planning for retirement, visit Bankrate.com. I’m Sheyna Steiner.