Choosing the best mutual funds for retirement.

Investing for retirement is most investors' biggest goal. From picking the best 401(k) mutual funds to making your money last, the best retirement funds can lead to a wealthier future. Whether you’re amassing money for tomorrow, or currently investing in retirement, here’s a list of the best mutual funds for retirement.

Next:PIMCO Income Fund (ticker: PIMIX) Credit

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PIMCO Income Fund (ticker: PIMIX)

Craig Kirsner, president of Stuart Estate Planning Wealth Advisors in Coconut Creek, Florida recommends the PIMIX bond because it fulfills his clients needs with income and less risk than an all stock portfolio. The fund’s goal is to maximize current income with capital growth as a secondary objective. The fund actively manages bonds with varying maturities and credit quality. Additionally, PIMIX employs derivative investment strategies to boost income. This income fund boasts a 5.53% yield and a 0.74% expense ratio. Additionally, PIMIX fund enjoys a five-year 5.49% average annualized return in contrast with the category average of 2.75%.

Next:

Choosing the best mutual funds for retirement.

Investing for retirement is most investors' biggest goal. From picking the best 401(k) mutual funds to making your money last, the best retirement funds can lead to a wealthier future. Whether you’re amassing money for tomorrow, or currently investing in retirement, here’s a list of the best mutual funds for retirement.

PIMCO Income Fund (ticker: PIMIX)

Craig Kirsner, president of Stuart Estate Planning Wealth Advisors in Coconut Creek, Florida recommends the PIMIX bond because it fulfills his clients needs with income and less risk than an all stock portfolio. The fund’s goal is to maximize current income with capital growth as a secondary objective. The fund actively manages bonds with varying maturities and credit quality. Additionally, PIMIX employs derivative investment strategies to boost income. This income fund boasts a 5.53% yield and a 0.74% expense ratio. Additionally, PIMIX fund enjoys a five-year 5.49% average annualized return in contrast with the category average of 2.75%.

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Vanguard Lifestrategy Conservative Growth Fund (VSCGX)

For those expecting a long retirement, Ryan Hughes, founder of Bull Oak Capital in San Diego, appreciates the balance between current income and growth potential offered by this fund. “I prefer VSCGX over a more conservative fund simply because there is a sizable need for capital appreciation during retirement." He says Wade D. Pfau conducted a study that examined the role equities play in a retirement portfolio. He found that retired individuals can experience a significant benefit by having a proper equity position within their portfolio. This diversified stock and bond fund earned a 4.99% annualized five-year return. With a low 0.12% expense ratio and 2.62% dividend yield, this is a solid retirement mutual fund.

Northern Global Tactical Asset Allocation Fund (BBALX)

There’s a lot to like about this diversified actively managed global investment fund. This investment includes about 18 funds, representing U.S. and international stocks, bonds, commodities, natural resources and global infrastructure assets. “The fund is an excellent choice for retirement planning since it provides individuals with exposure to a diversified range of U.S. and international asset classes and relieves them of the burden of monitoring global markets and making asset allocation decisions,” says Bob Browne, chief investment officer for Northern Trust and co-portfolio manager for BBALX. The fund’s five-year average annualized return was solid at 3.44%, while the 10-year 7.01% return beat the 6.79% category average. Retirees will also appreciate the 3.14% dividend yield.

Vanguard Target Retirement Income (VTINX)

Retirees can’t go wrong with a low fee Vanguard retirement income fund for cash flow. Another fund of funds, VTINX invests in five Vanguard index funds to reach a 30% stock and 70% bond asset allocation. The funds include domestic and international stock funds and four bond funds spanning total, international and inflation-protected bond funds. As would be expected of an index fund, the returns mirror those of the underlying indices with five- and 10-year returns of 3.79% and 6.11%, respectively. The fund handily beat the five- and 10-year average retirement income fund category returns of 3.13% and 5.75%, respectively. VTINX has a current dividend yield of 2.58% and an expense ratio of 0.12%.

Fidelity Freedom Funds

No retirement investing article would be complete without 401(k) mutual funds. Fidelity target-date funds are ideal for investing both before and during retirement. Many retirement plans offer Fidelity Freedom Funds or comparable investments. A target-date fund includes a mix of stocks, bonds and short-term assets, with greater equity allocation for younger investors and a more conservative allocation as retirement approaches. To choose the appropriate target-date fund, approximate your retirement year and invest in the corresponding fund. If you’re age 40, for example, then you might choose the Fidelity Freedom 2045 Fund (FFFGX). Today that fund owns 61% U.S. stock funds, 31% international stock funds, 6% bond funds as well as short-term debt and other assets.

Vanguard Total Stock Market Index Fund (VTSMX)

Vanguard is another popular provider of the best 401(k) funds. The Vanguard Total Stock Market Index Fund is an excellent domestic stock index fund for retirement investing. Launched in 1992, VTSMX seeks to mirror the performance of the overall U.S. stock market. The fund owns a representative sample of large-, mid-, small- and micro-cap stocks traded on either the New York Stock Exchange or the Nasdaq. The fund levies a low 0.14% expense ratio, in contrast with the 0.94% industry average. Also, VTSMX has a respectable dividend yield of 1.88%. In line with the long bull market, its five- and 10-year annualized returns are 9.13% and 13.85%, respectively.

Vanguard Long Term Bond Index Fund (VBLTX)

Stability and income are core features of the best retirement mutual funds for retirement. VBLTX meets both requirements. Add VBLTX to a stock mutual fund like VTSMX for a diversified U.S. investment portfolio. The fund tracks the Bloomberg Barclays U.S. Long Government/Credit Float Adjusted TR Index, which includes shares of corporate and U.S. government bonds with maturities of greater than 10 years. The 0.15% expense ratio trounces the 0.72% category average. The five-year return of 5.09% bests the 4.88% category average, while the 7.51% 10-year return of VBLTX slightly underperforms the category average of 7.61%.

Vanguard Prime Money Market Fund (VMMXX)

A list of the best mutual funds for retirement would be incomplete without a high yield cash money market fund. These investments “seek to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1,” according to Vanguard's website. A money market mutual fund invests in high-quality, short-term debt instruments, cash and cash equivalents. These investments strive to maintain a $1 share value. Money market mutual funds returns depend on market interest rates. The 0.16% expense ratio is economical and the current yield on VMMXX is 2.42%. The fund requires a $3,000 minimum investment and is an ideal pick for a retiree’s upcoming cash needs.

Consider these mutual funds for your retirement portfolio.

PIMCO Income Fund (PIMIX) Vanguard Lifestrategy Conservative Growth Fund (VSCGX) Northern Global Tactical Asset Allocation Fund (BBALX)Vanguard Target Retirement Income (VTINX)Fidelity Freedom Funds Vanguard Total Stock Market Index Fund (VTSMX)Vanguard Long Term Bond Index Fund (VBLTX)Vanguard Prime Money Market Fund (VMMXX)1 of 11

Barbara Friedberg, Contributor

Barbara A. Friedberg, MBA, MS is a veteran investment portfolio manager, fintech consultant ...  Read more

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