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Personal Finance

Optimizing a Retirement Portfolio for Income

Long-term government bonds, emerging-markets debt, and preferred stocks may take prominence for retirees who wish to live solely off a portfolio's income stream.

How can retirees build balanced portfolios that emphasize income production? Morningstar's director of personal finance, Christine Benz, discussed this topic with the head of retirement research for Morningstar Investment Management, David Blanchett, who has published a study on income-oriented portfolios.

Christine Benz: You co-authored a research paper about optimizing portfolios for income production. Often, when retirees are looking at optimizing their portfolios, they focus on total return, not just income return. What's the fundamental underpinning behind favoring a total-return strategy for generating retirement income?

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