With so many retirement investment strategies to choose from, how can you know which are the best investments for income and retirement overall? The truth is that everyone’s situation is different. As a result, the strategy that might be best for you could be quite different from what’s best for your neighbor. Generally speaking, however, for anyone who is retired or within 10 years of retirement, we believe that a plan built around income-generating investments can provide you with the best chance to be able to enjoy the lifestyle you’ve always envisioned for your retirement.

The nice thing about Investing for Income is that you can receive steady interest and dividend payments that can’t be taken away by unexpected circumstances like a drop in the stock market. That’s because often when it comes to Fixed Income Investing and the best fixed income investments, the interest and dividend payments owed to you are contractually obligated to be paid.

How To Plan My Retirement

Although it can be tempting to try and tackle the financial planning for your retirement on your own, we recommend working with a financial advisor to create a plan for how you will achieve your long-term goals. However, not just any advisor will do. We recommend that you work with a financial advisor who is also a fiduciary. That means they are legally obligated to always put your interests ahead of theirs. If you are retired, or close to retirement age, we recommend working with an advisor who is experienced in helping clients navigate the complexities of planning and saving for retirement—preferably one who specializes in investing for income.

The advisor you chose to work with is an important consideration that can have a lasting impact on the lifestyle you’ll be able to enjoy during retirement. 

Can I Take Money Out of My Retirement Plan?

This seems like a simple enough question, but the answer is … it depends. Of course, 

the best option is to avoid taking money out of your retirement plan as long as possible—at the very least until you have reached the age of 59 ½. This is the age where you can take withdrawals from your retirement accounts without having to pay an early withdrawal penalty.

There are a number of things you must consider before being able to determine if it is alright to take money from your retirement plan. Before doing so, it is always a good idea to consult with your financial advisor. Generally, however, you should only withdraw interest and dividends from your retirement portfolio without touching your principal. This is especially important during your early years in retirement because if you end up delving into the principal balance of your retirement investments too early, it could place you in jeopardy of cannibalizing your retirement savings.

The problem can become even worse if you happen to be invested in stock mutual funds and you need to withdraw funds while the market is down. Since the value of the shares in that fund will most likely be down, it means you would have to sell more shares to get the money you need—thus eating away at a greater percentage of your retirement savings. 

The good news is that this situation can be avoided by investing for income—in a manner that provides you with steady interest and dividend payments that you can expect on a regular basis. 

Some refer to these types of investments as passive income investments. In financial terms, passive income refers to money that a one-time investment continually generates. In other words, money that comes in the door with little to no “work” on your part.

What Are the Best Investments for Retirement Income?

Often, when people think about investing for income, they think about bonds and bond-like instruments. The great thing about investing in individual bonds is that when you buy a bond you get two important guarantees:

  1. A fixed rate of interest for the life of the bond
  2. When the bond matures, you are guaranteed to get the face value of the bond back—both guarantees are assuming there have been no defaults

Unfortunately, when you place your money in bond mutual funds, neither of these guarantees exist.

Investing for income is not limited to investing in bonds or bond-like instruments either. There are a wide range of options available, from high interest investments that pay you monthly interest to others that pay you dividends quarterly. In fact, the universe of income-generating investments is much bigger than that of traditional stock market investments.

If you are interested in learning more about investing for income, check out our past post: 10 Ways to Invest for Income.

How To Pick Investments for a 401(k)

Often, the retirement investment options offered through traditional workplace retirement savings plans can be somewhat limited. Usually, you’ll get a choice between a few different stock mutual funds that are categorized as conservative, moderate, or aggressive in terms of their risk profile. You might also get to choose between a few bond mutual funds. However, as we mentioned earlier, when you invest in bond mutual funds you do not get the benefit of the two guarantees that are inherent in individual bonds—so they are not necessarily the best option.

We also discussed the dangers of being invested in stock mutual funds when it comes time to taking withdrawals from your retirement plan. So, mutual funds aren’t necessarily the best option for those nearing retirement either.

Mutual funds in general are a murky pool of investments that really only publish their holdings once a quarter. That means that in the middle of the quarter, you really don’t know what stocks your money is invested in.

Another problem with stock mutual funds is that they are typically geared towards growth and not income. This could be a big problem if you are retired or nearing retirement, and the growth you are counting turns into a loss, or series of losses, due to a market correction.

Mutual funds can also carry high fees and unfavorable tax implications that can be reduced by investing in an actively-managed portfolio of individual securities. These are just a few reasons why we say that mutual funds are the disease of ease that’s putting Americans’ hard-earned retirement savings at risk. The ease that these funds provide advisors often comes at a cost to the individual investor. 


Mutual funds can be a useful investment tool for those just starting out saving for retirement, since they can offer an easy way to get investment diversification. Those who are nearing retirement might be better served by investing in an actively-managed portfolio of individual, income-generating securities.

How Often Can I Change My 401(k) Investments?

If you are still in your working years, your employer will determine how often you can change your 401(k) contribution. When it comes to the actual investments in your 401(k), this is decided by the 401(k) plan administrator. You can read your company’s employee handbook to find out the particulars, or you can call the plan administrator for your 401(k).

When it comes to making important retirement-related financial decisions, your best course of action is to consult with a financial advisor who is a fiduciary and well-versed in navigating the complexities of planning and saving for retirement—like all Income Specialists at The Retirement Income Store®.

By working with an advisor who specializes in investing for income, you can help to ensure that you have not overlooked any opportunities to help maximize the amount of retirement income your retirement savings can generate for you. 

If you would like to have a free, no-obligation conversation with an Income Specialist in your area, contact us today so you can learn about how you could establish your own steady streams of interest and dividends you can count on well into your retirement.