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Where to Go for Portfolio Income in Retirement | Morningstar
Source: morningstar.com
Article summary:
1. Retirees should focus on generating income in retirement and consider adding assets that will fund their necessary expenses, such as bonds, zeros, or single-premium immediate annuities.
2. While some investors may be getting more aggressive in going out on the yield curve to capture higher yields, people need to be conscious of the fact that their real return is still negative.
3. To protect against inflation, retirees can shorten the bands on their buckets and hedge against higher inflation rates by using a mix of stocks and bonds in their second bucket. It's also important to consider that spending declines in retirement, so inflation may not have as big an impact as expected.
Article analysis:
The article "Where to Go for Portfolio Income in Retirement" by Morningstar provides insights into generating income in retirement and the assets that belong in retirees' portfolios. The author, Robert Powell, suggests that retirees should think about how they will generate income in retirement and what kind of risk they want associated with that income. He recommends adding assets that will fund necessary expenses at a minimum, such as bonds or zeros, single-premium immediate annuities, or a bond ladder.
However, the article lacks evidence to support some of its claims. For instance, Powell mentions that people have been getting more aggressive in terms of going out on the yield curve and taking advantage of higher yields. Still, he does not provide any data to back up this statement. Additionally, while he acknowledges the risk of inflation for retirees' plans, he does not explore counterarguments or present both sides equally.
Moreover, the article seems to promote certain financial products without providing a balanced view of their pros and cons. For example, Powell mentions bond ladders several times as a way to protect against inflation but does not discuss their potential risks or downsides.
Furthermore, the article may be biased towards using financial advisors as sounding boards for retirees' investment decisions. While it is true that navigating retirement investments can be complicated and confusing, relying solely on an advisor may not always be the best option for everyone. The article could have explored other resources available to retirees who want to become more knowledgeable about their investments.
Overall, while the article provides some useful insights into generating income in retirement and protecting against inflation risks, it lacks evidence to support some of its claims and presents a somewhat one-sided view of certain financial products and investment strategies.
Topics for further research:
Risks and downsides of bond ladders in retirement investments
Counterarguments to the impact of inflation on retirees' plans
Alternative resources for retirees to become more knowledgeable about their investments
Pros and cons of single-premium immediate annuities
Strategies for generating income in retirement beyond bonds and annuities
The role of diversification in retirement portfolios for income generation