Top 10 Best Retirement Funds for Upcoming Retirees

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If you are a typical American approaching your sixties, you likely look forward to retiring and slowing down to enjoy the fruits of years of saving. You might hope that your nest egg will support you for the rest of your days. The best retirement funds can help retirees to get regular income to take care of their necessities without needing to enter the workforce again.

The right retirement fund varies depending on the financial situation and the financial goals of the retiree. Most people’s investment objectives for retirement have elements of cash preservation, income generation, and asset growth. In this article, we help you to compare the best retirement funds in the U.S.

FAQ on the Best Retirement Funds

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1. What Is a Retirement Fund?

2. What Factors Should I Consider When Choosing a Retirement Mutual Fund?

3. How Can I Minimize Taxes on My Retirement Income?

4. What Is the 4 Percent Rule for Retirement Income?

5. How Do I Determine if a Certain Retirement Fund Fits My Investment Objectives?

How We Reviewed

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We paid attention to the performance of the funds in terms of annual returns. Because short-term returns may vary dramatically over the years, we judged a fund’s yields using data from 5-year or ten-year periods, if available. We also considered the potential risk of the fund’s investment strategies. This, we judged depending on the type of assets the fund invests in. We also endeavored to find out the fund managers of the funds and what reputation they have.

Finally, we considered the expenses retirees would incur if they invested in the funds. This we have expressed as the expense ratio in percentage. We have also considered the minimum investment amount for each fund.

Overall Expense Ratios for the Best Retirement Funds

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The expense ratio for the best retirement funds ranges from 0.04 percent to about 0.97 percent. This means that the investor pays between $4 and $97 for every $10,000 they have in the fund per year.

What We Reviewed

  • Vanguard Wellesley Income
  • State Farm Lifepath Retirement Fund
  • Fidelity Capital & Income (FAGIX)
  • Schwab U.S. Large-Cap Value ETF (SCHV)
  • Vanguard Tax-Managed Balanced Fund (VTMFX)
  • Dodge & Cox Stock (DODGX)
  • Loomis Sayles Bond Retail (LSBRX)
  • PIMCO RealPath Income Fund
  • USAA Target Retirement Income Fund
  • JPMorgan SmartRetirement Income Fund

Vanguard Wellesley Income

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The Vanguard Wellesley Income (VWINX) fund is a good choice for investors who need a conservative and low-cost mutual fund. The fund is composed of roughly 66 percent bonds and 33 percent stocks. The fund is more biased towards income compared to growth, and it has good long-term returns.

Its fixed-income side has almost 1,000 bonds that vary greatly in terms of credit quality and duration. Stocks in this fund include Microsoft Corporation, Wells Fargo, JPMorgan Chase, and other major companies. Expect to spend about 0.22 percent of your money in expenses. The fund allows a minimum initial investment of $3,000 and is ideal for people who prefer a conservative approach to investing.


  • Low costs
  • Minimal risk approach safeguard investment


  • Average returns

State Farm Lifepath Retirement Fund

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The State Farm Lifepath Retirement Fund (SLRA) invests in equity, like real estate investment trusts and bond exchange-traded funds. This fund, which has assets worth $1.1 billion, focuses on long-term investments so it is best for young people whose expected retirement date is still years away. This fund yielded returns of 3.62 last year and about 5.36 percent over the last ten years. Fees for this fund average 0.50 percent. The fund has a rather high 5 percent front-load (sales) fee. This fund risk potential is average compared to other funds.


  • Good returns


  • Exorbitant 5 percent sales fee
  • Only gives good returns if you invest years before retirement

Fidelity Capital & Income (FAGIX)

Fidelity Capital & Income ranks highly amongst the best retirement funds in terms of high yields. At an expense rate of 0.67 percent, this fund is a bit extensive. The fund has a yield of 3.9 and a 9.9 percent lifetime average annual return. But these returns come with significant risks. The bond portfolio of this fund is mainly made up of below-investment-grade issues. The fund dedicates nearly 20 percent of its portfolio to growth stocks like Skyworks Solutions, Alphabet Inc, and Qorvo. This fund has a minimum initial investment requirement of $2,500.


  • Impressive performance
  • Low minimum investment amount
  • Good returns


  • High expenses
  • Its focus on growth stocks means it is one of the riskiest funds on our list

Schwab U.S. Large-Cap Value ETF (SCHV)

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The Schwab U.S. Large-Cap Value ETF has a very small annual fee (0.04 percent). This fund is one of the least expensive funds around. Clients of this fund can also trade without paying commissions. The fund focuses on value stocks which tend to be less volatile compared to growth stocks. This fund holds 360 stocks and tracks the Dow Jones Large-Cap Value Total Stock Market Index. The SCHV dedicates 20 percent of the investors’ funds to financial services stocks, and 29 percent goes into technology and consumer staple stocks.


  • Some of the lowest fees we have seen
  • Low risk


  • Modest returns

Vanguard Tax-Managed Balanced Fund (VTMFX)

The VTMFX is one of the best retirement funds for retirees who have taxable accounts. VTMFX targets countering taxes and inflation by investing 50 percent of its clients’ money in stocks like Apple, Alphabet, and Microsoft. The other 50 percent is dedicated to tax-exempt municipal boards (at the federal income level). Low-income earners may struggle to invest in this fund since its minimum initial investment amount is $10,000 but most retirees should be able to raise this much. This fund works well either as the core holding or as a means of diversification. The expenses for this fund are quite low at just 0.09 percent.


  • Very tax efficient
  • Invests in quality stocks
  • Great yields in the past few years


  • Big initial investment needed

Dodge & Cox Stock (DODGX)

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DODGX is one of the best retirement funds for investors wanting a low-cost solution that is actively managed. This fund started way back in 1931 and is one of the nation’s oldest funds. The fund also sets itself apart when it comes to performance and cost. Its 20-year annualized return is about 9 percent and is one of the best returns of any fund.

This fund invests most of the funds in common stocks of big companies like Bank of America while the remaining funds are invested in bonds and select preferred stocks. This fund has a minimum initial investment requirement of $2,500 and expenses will take up 0.53 percent of your cash.


  • Very high returns
  • Active management may help avoid the effects of a recession
  • Company has pedigree


  • Fees are on the high side

Loomis Sayles Bond Retail (LSBRX)

Loomis Sayles Bond Retail is a bond fund that invests in bonds from a number of sectors. The fund works well if you invest in it as a compliment to your core holding. This fund is managed by Dan Fuss, whose experience in managing such assets spans back for almost half a century. In addition to U.S, bonds, the fund has some foreign bonds. Yields from this fund are about 3.2 percent. However, the fact that the fund has some international bonds creates added risks to investors. Expenses for this fund are rather high at about 0.91 percent, and you need to invest at least $2,500 to open an account with this fund.


  • Good yields
  • Low minimum initial investment


  • Investing in international bonds has some risks
  • The expenses are on the high side

PIMCO RealPath Income Fund

Maximize real return and preserve capital

This fund is an open-end type and its objective is to maximize real return and preserve capital. This fund invests mostly in underlying funds but also invests in other securities. The fund returned 3.02 percent last year and 5.19 percent over the past decade. Fees for this fund are average, and its expense ratio is 0.38 percent.


  • Prudent investment


  • Risks associated with investing in international bonds

USAA Target Retirement Fund

The United Services Automobile Association (USAA) was launched in the 1920s. The association started by setting up a mutual insurance company for people other companies deemed too risky to insure. Currently, the USAA Target Retirement Income Fund requires investors to inject a minimum of $500 as the initial investment. This fund’s main objective is capital appreciation. The fund’s asset portfolio is composed of about 35 percent underlying USAA funds that invest in securities and alternative assets. The other 65 percent is allocated to underlying USAA funds that invest in fixed-income securities.

The fund has yielded about 2.99 percent in past five years. The USAA Target Retirement Fund has a high net expense ratio which can be as high as 0.97 percent for some people.


  • Conservative approach means that investors funds are safe


  • Modest returns
  • Some of the highest costs of any fund on our list

JPMorgan SmartRetirement Income Fund

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The JPMorgan SmartRetirement Income fund is a target-date fund that uses insights from J.P. Morgan’s specialists to invest. The fund follows a passive-active strategy to allocate assets. Portfolio managers for this fund include Jeffrey Geller and Anne Lester, and the fund has assets worth about $3.65 billion. This fund, however, does not entertain applications from low-income people as its minimum initial investment is set at $1 million. There is no minimum for subsequent investments, however.

This fund’s 10-year yields is 6.78 percent. The cost of this fund is on the high side, and gross expenses total about 0.70 percent with net expenses at 0.61 percent. The fund has a diversified portfolio that allocates about 60 percent to both domestic and international fixed-income bonds and 34 percent to equity.


  • Good long-term yields


  • Big minimum investment requirement means it is out of reach for low-income earners
  • High expense ratio

The Verdict

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The Vanguard Wellesley Income is one of the best retirement funds you can invest in. At a cost of 0.22 and a minimum initial investment of $3,000, the fund is affordable for most people thinking about retirement. Unlike some funds which pursue very aggressive and risky investment strategies, the VWINX normally plays it safe and invests mostly in reputable bonds and stocks, so it is very unlikely that you will lose your hard earned money when you retire.

If you are more focused on growth and don’t mind the risk, then Fidelity Capital & Income (FAGIX) is one of the best retirement funds in terms of pursuing an aggressive growth strategy. But investors are exposed to an above average risk of losing their investment with this fund.

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