American Funds Retirement Plans: Building a Secure Retirement

Building a secure retirement is a top priority for many Americans, and American Funds offers a range of retirement plans designed to help you achieve your long-term goals.

American Funds' retirement plans are built on a foundation of low-cost, diversified investment portfolios that aim to provide stable returns over time.

By investing in a diversified portfolio, you can potentially reduce your risk and increase your chances of achieving your retirement goals.

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The American Funds Target Date Retirement Series is a professionally managed collection of mutual funds designed to help you invest for retirement and meet your changing financial needs over time.

You can start with a target date retirement series from Capital Group, most often selected for best-in-class target date solutions, and then build a diversified investment menu by choosing funds from many well-respected managers.

Seven of the underlying strategies in the American Funds Target Date Retirement Series were recognized on the Morningstar "Thrilling 36" list.

The American Funds Target Date Retirement Series and other highly regarded American Funds are also available on many other DC platforms.

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American Funds offers a range of retirement plans designed to help you invest for the future.

Their Target Date Retirement Series is a collection of mutual funds that can help you meet your changing financial needs over time.

Investment returns are critical to any plan participant's long-term success, and American Funds' Target Date Retirement Series is often selected for best-in-class target date solutions.

You can build a diversified investment menu by choosing funds from many well-respected managers, and American Funds' Target Date Retirement Series is available on many other DC platforms.

Here are some key features of American Funds' Target Date Retirement Series:

Low fees are crucial to positive investor outcomes, and American Funds' Target Date Retirement Series has relatively low fees compared to other options.

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Investment professionals invest alongside you, which means that the people managing the funds also have a stake in their performance.

American Funds' Target Date Retirement Series is a solid choice for retirement savers who want a pro to do the work for them.

Here are the ranks of the American Funds Target Date Retirement Series among the top 401(k) funds:

Participant contributions are a crucial part of investing for retirement, and there's a limit to how much you can contribute each year.

The annual maximum contribution is $23,500 in 2025, or $31,000 for those 50 or older. Contributions are made before taxes are deducted, so you won't pay income taxes at the time of investment.

This means taxes on both contributions and earnings will be paid when you withdraw the money. It's essential to consider this when planning your retirement strategy.

You can make traditional contributions, or you might be able to make Roth contributions, which are made with money that's already been taxed. This can be a great option if you've already paid taxes on your income.

With Roth contributions, money that's been taxed won't be taxed again, and earnings are tax- and penalty-free for qualified distributions.

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Investing for retirement requires a smart choice. The American Funds Target Date Retirement Series is a professionally managed collection of mutual funds designed to help you invest for retirement and meet your changing financial needs over time.

Low fees are crucial to positive investor outcomes. High investment fees and costs can reduce your long-term retirement savings. The lower the costs, the better it is for you.

A suggested annual withdrawal rate range for the American Funds Retirement Income Portfolio — Enhanced is 3.50%–4.25%. This fund strives for three investment objectives: current income, long-term growth of capital, and conservation of capital, with an emphasis on income and growth of capital.

The American Funds Target Date Retirement Series offers a top-ranked investment option for retirement savers. It ranks among the top 401(k) funds, with the 2030 fund ranking #39 and the 2025 fund ranking #51.

The series has a unique glide path, holding more in cash than its peers but also having a slightly more aggressive stock position. For example, the 2040 Target Date Retirement fund holds just under 6% of its assets in cash and 84% in stocks and 10% in bonds.

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Investing for retirement requires a smart and informed approach. A professionally managed collection of mutual funds, such as the American Funds Target Date Retirement Series, can help you invest for retirement and meet your changing financial needs over time.

Low fees are crucial to positive investor outcomes. High investment fees and costs can reduce your long-term retirement savings, so it's essential to look for funds with low expense ratios, like American Funds American Balanced, which has an expense ratio of 0.58%.

Investors who want an all-in-one fund that holds stocks and bonds may want to consider American Funds American Balanced. This fund fine-tunes its blend of stocks and bonds to achieve three goals: conserve capital, provide current income, and offer long-term growth.

The fund's risk-aware positioning helped it outperform its peers during the pandemic's early days in 2020. American Balanced sank 22% between February and March 2020, while its typical peer lost 24%.

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A target-date fund, such as the American Funds Target Date Retirement Series, can be a solid choice for investors who want to put their investments on autopilot. These funds shift the blend of stock and bond funds over time to a more appropriate allocation as you get closer to retirement.

The American Funds Target Date Retirement Series has a glide path that holds considerably more in cash than its typical peer, but each of the portfolios also has a slightly more aggressive stock position. For instance, the American Funds 2040 Target Date Retirement fund holds just under 6% of its assets in cash and 84% in stocks and 10% in bonds.

If you're looking for a fund that splits its portfolio between U.S. and foreign stocks, American Funds New Perspective may be a good option. This fund has stayed above average for the majority of each of the past 11 calendar years, making it one of the best American Funds for 401(k) investors.

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Investment professionals invest alongside you, so you can be confident that the funds are managed by experienced and knowledgeable individuals.

The American Funds Fundamental Investors fund has a value tilt, which has been a drag in recent years, relative to growth-oriented shares.

This is reflected in its performance, as it now lags the S&P 500 based on annualized returns over the past three, five, and 10 years.

The fund's volatility has been roughly as high as the index over the same period, which may not be desirable for investors seeking stability.

Fundamental Investors has an expense ratio of 0.61%, which is relatively low.

However, its 1-year return of 29.0% is not enough to make up for its underperformance over the long term.

Here's a comparison of the fund's performance with the S&P 500 index fund over the past 10 years:

The fund's income offering is also unimpressive, with a yield of 1.3%, the same as a popular S&P 500 index fund.

Its diversified equity exposure is a plus, but an S&P 500 index fund would have offered more reward for the risk over the past decade.

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The American Funds Target Date Retirement Series is a professionally managed collection of mutual funds designed to help you invest for retirement and meet your changing financial needs over time. This investment option is a smart choice for retirement planning.

You can invest with confidence knowing that the American Funds Target Date Retirement Series is a professionally managed collection of mutual funds.

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If you're looking for a reliable income portfolio, consider the American Funds Retirement Income Portfolio options.

These portfolios strive to balance current income, long-term growth of capital, and conservation of capital.

The Moderate portfolio suggests an annual withdrawal rate range of 3.25%–4.00%.

The Enhanced portfolio takes it a step further, aiming for a higher income and growth of capital, with a suggested annual withdrawal rate range of 3.50%–4.25%.

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So you're looking for the right solution for your clients? Well, it's great that you're considering their needs. The American Funds Target Date Retirement Series is a great option, designed to help clients invest for retirement and meet their changing financial needs over time.

American Funds offers a range of solutions that cater to different client needs. These solutions are designed to serve a broad range of clients, from small- to mid-size employer-sponsored retirement plans.

Here are some key features to consider:

For larger plans, Capital Group offers a range of features, including fixed-dollar, transparent pricing and robust recordkeeping features. These features can include automated notice creation/delivery and mandatory distribution services.

American Funds retirement plans offer a range of features to help you achieve your long-term goals.

You can start with a target date retirement series from Capital Group, which is often selected for its best-in-class target date solutions. These funds are designed to provide critical investment returns for a plan participant's long-term success.

Seven of the underlying strategies in the American Funds Target Date Retirement Series were recognized on the Morningstar "Thrilling 36" list. This is a testament to the quality and performance of these funds.

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American Funds offers a diversified investment menu by choosing funds from many well-respected managers. This allows you to build a stronger plan menu that meets your needs.

The American Funds Retirement Income Portfolio Series is designed to help address the needs of investors nearing or in retirement. These funds of funds are focused on withdrawals and longevity, seeking to support different withdrawal rate ranges while maintaining as much of a retiree's initial investment as possible.

These funds are flexible, made up of different mixes of equities and bonds, allowing for variation in withdrawal rates and risk tolerances. This flexibility is beneficial for retirees with different financial situations.

The American Funds Retirement Income Portfolio Series is actively monitored by the Portfolio Solutions Committee, which provides ongoing research and attention to these funds. This ensures that they remain aligned with your needs and goals.

Here are some key features of the American Funds Retirement Income Portfolio Series:

American Funds retirement plans offer a range of plan management options to help you stay on track.

You can choose from a variety of investment portfolios, including the Growth Portfolio, which has a 5-year annualized return of 8.35%.

The plan's investment options are designed to help you achieve your retirement goals.

The Growth Portfolio has a mix of 55% equity and 45% fixed income investments.

American Funds also offers a Target Date Retirement Portfolio, which automatically adjusts its asset allocation based on your retirement date.

This portfolio has a mix of 80% equity and 20% fixed income investments in the year 2030.

The plan's management fees are competitive, with an average expense ratio of 0.45%.

American Funds also offers a range of services to help you manage your plan, including online account access and a dedicated plan administrator.

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If you're looking for a reliable portfolio to support your retirement goals, American Funds offers several options. The American Funds Retirement Income Portfolio — Enhanced is one such option.

This portfolio strives to achieve three key objectives: current income, long-term growth of capital, and conservation of capital, with a focus on income and growth of capital.

The suggested annual withdrawal rate for this portfolio is between 3.50% and 4.25%.

You'll want to consider this rate when planning your retirement income.

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Capital Group is a reliable and easy-to-do-business-with firm, often selected by retirement plan advisors for its defined contribution plans, serving over 370,000 businesses.

For a stronger plan menu, consider starting with a target date retirement series from Capital Group, most often selected for its best-in-class target date solutions.

Seven of the underlying strategies in the American Funds Target Date Retirement Series were recognized on the Morningstar "Thrilling 36" list.

The American Funds Target Date Retirement Series and other highly regarded American Funds are also available on many other DC platforms.

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Target Date Funds are a type of investment that can help manage risk as you near retirement. They're designed to shift from more aggressive to more conservative investments over time.

The allocation strategy of target date funds doesn't guarantee that your retirement goals will be met, but it does provide a structured approach to investing for the future.

To find your target date fund, add your birth year to the year you plan to retire and begin taking retirement withdrawals. This will give you the target date for your fund.

Here's a simple way to think about it: if you plan to retire at 65 and were born in 1955, your target date fund would be 2020.

Significant stock investments throughout the lifetime of your fund can help manage the risk of outliving your savings in retirement. An increased emphasis on bonds as you near your retirement date can help manage the risk of market declines.

The fund is managed beyond retirement, so you could feasibly use a single fund for decades. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.

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The suggested annual withdrawal rate ranges for American Funds retirement plans are determined by the Portfolio Solutions Committee, and they vary depending on the portfolio.

These ranges are based on income and capital gain expectations, as well as historical data and market projections.

The actual withdrawal rate should be determined on an individual basis by the financial professional and retiree, and should be adjusted to maintain sustainability in various market conditions.

Differences in the portfolio returns, inflation, and interest rates over time may prompt the Portfolio Solutions Committee to change the suggested withdrawal rate ranges.

It's essential to evaluate these ranges over time, as they are only suggestions and should not be considered a guarantee.

The portfolios are designed to accommodate withdrawals that may include part of the investor's principal, to the extent the income earned by the portfolio is less than the withdrawal amount.

To give you a better idea, here are the key considerations for determining the right withdrawal rate: