A well-planned retirement portfolio should ideally be built around several different income buckets. When combined, those sources aim to produce a sustainable withdrawal rate that supports ongoing living expenses without exhausting savings.
This framework is often tied to the 4% rule, which originated from academic research that examined how much a retiree could withdraw annually from a diversified portfolio without running out of money. The basic idea was simple: Withdraw about 4% of the portfolio in the first year, then adjust that amount for inflation each year thereafter.
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While the rule has faced criticism over time, especially given changing market conditions, longer life expectancies and lower bond yields, its core principle still matters. Retirement portfolios should be structured to preserve capital while earning a return that keeps pace with inflation.
Most retirees rely on more than just investment accounts. Social Security is one key pillar, and despite ongoing concerns about its long-term funding, it remains a meaningful source of income for today’s retirees and those approaching retirement. Some investors also choose annuities to create predictable cash flow, trading flexibility for certainty.
For investment assets, whether held in a workplace 401(k) plan or a self-directed Roth IRA, the outcome often comes down to fund selection. Employer-sponsored plans typically offer a limited menu of mutual funds. Self-directed accounts provide access to a broader range of exchange-traded funds (ETFs), giving investors more flexibility in how they shape risk and income.
When retirement is the primary objective, two factors tend to dominate decision-making: risk tolerance and time horizon. As the time horizon shortens, the ability to recover from large market drawdowns decreases. That often leads investors to favor more conservative options.
Many retirement-focused portfolios lean toward higher allocations to high-quality government and investment-grade corporate bonds, lower-volatility stocks or dividend-paying equities. Even within these categories, however, there is wide variation. Some funds are better constructed, lower cost or more consistent income generators than others.
“We focus on a few critical factors when selecting funds for retirees: fees, historical performance and how volatile a fund is compared to its benchmark,” says Brandon Clark, director of financial planning at the Clark Group Asset Management. “To manage this balance, we often use ‘pairings’ of funds that are designed to offset each other’s risks.”
Here are seven of the best funds for retirement today:
| Fund | Expense ratio |
| Vanguard Target Retirement Income Fund (ticker: VTINX) | 0.08% |
| Vanguard LifeStrategy Income Fund (VASIX) | 0.11% |
| Vanguard Wellington Fund Investor Shares (VWELX) | 0.25% |
| Vanguard Wellesley Income Fund Investor Shares (VWINX) | 0.23% |
| Invesco S&P 500 Low Volatility ETF (SPLV) | 0.25% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 0.56% |
| JPMorgan Hedged Equity Laddered Overlay ETF (HELO) | 0.50% |
Vanguard Target Retirement Income Fund (VTINX)
“For more than 20 years, Vanguard’s target retirement funds have provided a low-cost, highly diversified index-based approach designed to get investors to and through retirement,” says Brian Miller, senior investment director on the multi-asset solutions team at Vanguard. For investors already retired, VTINX represents the final iteration of what all Vanguard target retirement funds eventually become.
Target retirement funds gradually shift their asset mix over time. Early in an investor’s career, they hold a higher allocation to stocks to support growth. As retirement approaches, the glide path steadily increases exposure to bonds to reduce volatility. For VTINX, the portfolio is heavily tilted toward income and capital preservation, with over two-thirds of assets in bonds. VTINX currently pays a 3.2% 30-day SEC yield and has a low 0.08% expense ratio.
Vanguard LifeStrategy Income Fund (VASIX)
“Vanguard’s LifeStrategy Funds are a series of portfolios that feature various asset allocation strategies that align with an investor’s risk tolerance,” Miller says. “These broadly diversified, low-cost funds are designed to provide a complete portfolio in a single fund and aim to help investors manage risk while growing their savings.” For retirees, VASIX is designed to fill that role.
VASIX is even more conservative than VTINX, with about 80% of the portfolio allocated to bonds and 20% to stocks. That structure prioritizes income and stability, but it is not risk-free. A heavy bond allocation leaves the fund exposed to interest rate risk. Still, Vanguard assigns the fund a “2 out of 5” risk rating, reflecting its relatively low volatility. VASIX currently pays a 3.5% 30-day SEC yield.
Vanguard Wellington Fund Investor Shares (VWELX)
“VWELX is a moderately aggressive fund with a higher allocation to stocks than bonds, which might be appropriate for someone that wanted to risk more price volatility in order to possibly see more potential for total return growth from their retirement fund,” says Michael Schulman, partner and chief investment officer at Running Point Capital Advisors. The current split is roughly 65% stocks and 35% bonds.
VWELX dates back to 1929. Since inception, it has delivered an 8.4% annualized total return. Unlike Vanguard’s Target Retirement and LifeStrategy funds, VWELX does not rely on underlying index funds. Both the stock and bond sleeves are actively managed. That approach comes with higher costs, reflected in a 0.25% expense ratio. The fund currently pays a 2% 30-day SEC yield.
Vanguard Wellesley Income Fund Investor Shares (VWINX)
“VWINX is a solid balanced mutual fund that seeks sustainable income along with moderate long-term capital appreciation by investing 60% to 65% of its assets in investment-grade corporate, U.S. Treasury and government agency bonds, and approximately 35% to 40% in U.S. large-cap stocks with a value tilt,” Schulman explains. This fund may appeal to retirement investors who find VWELX too equity-heavy.
“Overall, VWINX is a moderately conservative fund with a higher allocation to bonds than stocks, which might be appropriate for someone that wanted to see more income growth than capital growth,” Schulman says. The heavier bond exposure supports a higher level of income, with VWINX currently paying a 3.6% 30-day SEC yield. The fund charges a 0.23% expense ratio, similar to VWELX.
[Read: 9 of the Best Bond ETFs to Buy Now.]
Invesco S&P 500 Low Volatility ETF (SPLV)
“By carefully analyzing beta and comparing across asset classes such as large-cap growth versus large-cap value, we can pair funds in a way that potentially lowers overall risk while still capturing attractive returns, all while keeping costs low,” Clark explains. “The result is what retirement-focused investors ultimately want: stronger risk-adjusted returns, not just raw performance numbers.”
In line with that approach, some retirees may prefer an alternative to a traditional S&P 500 fund. A good option is SPLV, which selects the 100 stocks in the S&P 500 with the lowest trailing one-year volatility and weights them inversely, giving larger positions to the least volatile names. In practice, this leads to heavier exposure to defensive sectors such as utilities, health care and consumer staples.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
Many of the retirement-focused funds discussed earlier prioritize stability, but they do not always generate enough income on their own to meet the 4% rule. While selling shares can help cover the gap, some retirees are reluctant to do this. DIVO bridges this gap by combining dividend-paying stocks with covered calls. The fund currently provides a 5.6% distribution yield with monthly payouts.
“DIVO is designed to deliver consistent, tax-efficient income by combining dividend-paying large-cap stocks with a tactical covered-call strategy,” explains Nathan Miller, vice president of product development at Amplify ETFs. “Returns come from three sources: dividends, option premiums and capital appreciation.” The ETF charges a 0.56% expense ratio and has a five-star Morningstar rating.
JPMorgan Hedged Equity Laddered Overlay ETF (HELO)
The term “boomer candy” often refers to lower-risk funds designed to keep retirees comfortable through market cycles. Traditional examples rely on blended stock and bond portfolios, which remain vulnerable when rising interest rates pressure both asset classes at the same time. HELO was designed to address that weakness. Instead of relying on fixed income, HELO uses an options overlay to manage risk.
HELO’s core exposure is based on the S&P 500. The fund buys put options that are 5% out of the money to establish baseline downside protection, then finances that hedge by selling puts about 20% out of the money and selling call options roughly 3.5% to 5.5% above the market. This structure is commonly referred to as a put-spread collar. HELO charges a 0.5% expense ratio.
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7 Best Funds for Retirement originally appeared on usnews.com
Update 12/23/25: This story was previously published at an earlier date and has been updated with new information.
