Understanding Investing

Building the Retirement Income Pyramid

Retirement planning isn’t easy. As more and more people approach retirement age, they’re turning to their financial advisors to help them tackle the difficult task of turning their savings into an income stream that will help fund their retirement goals for the rest of their lives.

What this chart shows

In retirement portfolios, different types of investments address different objectives. Some aim to provide stable income to fulfill life’s needs, while others aim to generate attractive levels of growth and income to support and maintain a lifestyle.

What it means for investors

In retirement, preserving capital and receiving a dependable stream of income are your most critical concerns. The retirement income pyramid can help address these goals – while guarding against volatility, market shocks, interest rate risk and other threats to your long-term financial security.

The chart is a retirement income source pyramid. The top (smallest; alts and liquid investments) section represents wishes, the middle section (medium sized; equities) represents wants and the bottom (largest area; CDs and annuities) represents needs.


All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Investors should consult their investment professional prior to making an investment decision. Alternatives strategies may engage in speculative investment practices that increase the risk of investment loss. Investments in illiquid securities may reduce the returns of a portfolio because it may be not be able to sell the securities at an advantageous time or price.

PIMCO does not issue or sell annuities or other insurance products or products that combine securities and insurance features. Insurance products can be sold only by a licensed insurance agent. Contact an insurance agent for information concerning annuities. Guaranteed annuity payments are subject to the insurer’s claims-paying ability.

Money market funds are not insured or guaranteed by FDIC or any other government agency and although such funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in money market funds.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2017 PIMCO