Income to Outcome: Investing in Retirement

A framework for balancing investment income and long term growth.

Two Ideas: "Paycheck Replacement*" and Principal to Grow

One of the most important goals for investors facing retirement is the comfort of knowing that they can sustain their desired level of spending throughout their lives, without the fear of running out of money. PIMCO's retirement framework seeks to provide advisors and investors a simple way to approach retirement investing and aims to address the desire for both predictable income and long term growth — without giving up control or the ability to change course.

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Seeks to solve for predictable income and portfolio growth

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Intuitive to understand, simple to implement and maintain

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Flexible to allow for changes in spending over time

PIMCO Pro – Retirement Income Analysis


Income to Outcome: PIMCO’s Framework for Retirement Investing

Introducing Retirement Income Analysis, a new tool on the PIMCO Pro platform that allows you to implement our framework and create personalized retirement income plans for clients nearing or in retirement.

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"Paycheck Replacement*"

Laddering into Retirement

As investors enter retirement they may wonder how they might replace all or a portion of what their paycheck provided with a new source of predictable income. Market volatility can make it difficult to maintain steady investment income in retirement. And much of the traditional thinking on how to best replace income can be confusing. Our framework offers a simple approach.

  • A "target maturity" bond portfolio that can be extended throughout retirement and that seeks to deliver a predictable income stream along the way
  • A well structured approach to retirement income may allow investors the flexibility to consider better claiming strategies for their social security benefits (investors should speak with their investment and tax professionals)
  • Gives investors flexibility to manage level and extent of spending over time
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Principal to Grow

Investing For Growth

While laddered bond strategies seek to deliver predictable income, they are not designed for growth. We think it's important for retirees to consider whether they can benefit by investing a portion of their assets in a long-horizon growth portfolio which can invest in higher risk assets to address future (often unknown) spending needs or leave more for loved ones or charity.

  • Capital may grow faster when unburdened by near-term withdrawals

*Investment products contain risk and may lose value. There is no guarantee that an investment product will be successful in producing income. Investors should consult their investment professional prior to making an investment decision.

Working with a Financial Advisor

The value of partnering with a financial advisor to plan for your retirement extends beyond investment performance – talk to your financial advisor to learn how PIMCO’s retirement framework, Income to Outcome: Investing in Retirement, can contribute to your retirement goals.

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A “targeted maturity” bond portfolio is only one potential income strategy and may not be the best solution or suitable for all investors. Income replacement needs may vary by household. An investor should consider and discuss how best to address their income needs with their financial and tax professionals.

The retirement allocation framework presented here is based on what PIMCO believes to be generally accepted investment theory. It is for illustrative purposes only and may not be suitable for all investors. The retirement allocation framework is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as, a forecast, research, investment advice or a recommendation for any specific PIMCO or other strategy, product or service. Individuals should consult with their own financial and tax advisors to determine the most appropriate allocations for their financial and tax situation, including their investment objectives, time frame, risk tolerance, savings and other investments. Fixed income is only one possible portion of an investor's portfolio, which can also include equities and other products. Investors should speak to their financial advisors regarding the investment mix that may be right for them based on their financial situation and investment objectives.

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 low interest rate environments increase this risk. 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.

This material contains the current opinions of the manager and such opinions are subject to change without notice. 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. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. 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. ©2019, PIMCO