Investing Specialists

A Moderate Retirement Portfolio in 3 Buckets

Christine Benz

Note: The following is part of Morningstar's 2019 Portfolio Tuneup week. A version of this article appeared on Aug. 30, 2018.

The going has gotten tough for retiree finances during the past decade and a half, with extreme stock market volatility, low bond yields, and pensions under fire. Whereas the previous generation of retirees may have been able to easily generate a livable income with a combination of bond and dividend payments, doing so today is a heavier lift. The S&P 500 currently yields about 2%, and high-quality intermediate-term bonds pay a bit more than 3%. That means income-minded retirees need to either have a lot of wealth, such that today's low income payout on a 60% stock/40% bond portfolio is enough to live on, or venture into higher-risk parts of the stock and bond markets to amp up their income streams. 

Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.