Schwab Plans Retiree-Focused Payout Funds

Funds will target monthly cash distributions.

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Add a new entrant to the growing pool of payout funds, which aim to help retirees convert their nest eggs into a steady stream of monthly income. Today, Charles Schwab announced plans for its version, simply called Monthly Income funds:

  • Moderate Payout, made up of 60 percent fixed income and 40 percent stocks, targets a payout of 3 percent to 4 percent annually.
  • Enhanced Payout, which is 75 percent fixed income and 25 percent stocks, aims for a 4 percent to 5 percent annual payout.
  • Maximum Payout, at 90 percent fixed income and 10 percent stocks, targets a 5 percent to 6 percent annual payout.
  • Schwab says it can adjust the funds' stock and bond weightings depending on market conditions. Annual expenses for the funds, which are made up of an underlying mix of stock and bond funds, will range from 0.66 percent to 0.76 percent. The funds will commence operations on March 28, according to Schwab.