Securing Reliable Fixed Income: The Foundation of a Sustainable Retirement

Securing Fixed Income Is the Foundation of Retirement

Securing fixed income is a major priority for individuals approaching retirement and for those already retired. Market growth is always welcome. Rising stock prices and appreciating real estate can enhance long-term wealth. But the foundation on which those risk assets stand is fixed income.

Without a reliable and predictable income base covering monthly living expenses, retirement becomes vulnerable. When income depends too heavily on market performance, even a temporary downturn can create lasting damage. Living expenses do not pause during market corrections, and income is still required regardless of conditions.

A sudden shock to the stock or real estate market can erode a portfolio faster than expected, particularly when withdrawals are required at the same time. This is why fixed income plays such a critical role. It provides stability when other assets fluctuate.

Below are several fixed income positions commonly used to generate income. These can be implemented independently or discussed with an advisor as part of a broader retirement strategy.

Common Fixed Income Options Used for Income

Many investors turn to fixed income ETFs to generate yield and maintain liquidity. Some Examples that are thriving in the current market environment include:

• Short-maturity bond ETFs offering approximately 4.7% annual yield distributed monthly

• AAA-rated collateralized loan obligation funds yielding around 5.2% annually

• BBB-rated collateralized loan obligation funds offering higher yields near 7.6%

• Corporate bond ETFs with lower yields around 2.4%

• High-yield bond ETFs offering yields near 5.7%

At first glance, yield often becomes the focal point. However, yield alone does not tell the full story. Income stability, predictability, and risk exposure matter just as much, particularly when income is being used to fund essential living expenses.

Income Stability Matters More Than Yield

One important consideration with these fixed income ETFs is that the income they produce is variable. The yields are not locked in and can change at any time. While income may be paid monthly or quarterly, there is no guarantee that the payment amount will remain consistent.

Additionally, while these ETFs are generally less volatile than equities, their net asset values can and do fluctuate. Rising interest rates, credit events, or market stress can impact both price and income.

For those who value liquidity and flexibility, these characteristics may be acceptable. ETF-based fixed income can be bought or sold easily, adjusted over time, and integrated into a broader portfolio.

However, for individuals who prioritize predictability and guarantees, these solutions may not fully address the need for stable income.

When Predictability Is the Priority

For those seeking consistency and contractual guarantees, a different type of fixed income asset may complement a portfolio: the Multi-Year Guaranteed Annuity (MYGA).

A MYGA functions similarly to a fixed income instrument, but with key differences:

• The rate is locked in for a set term

• The value does not fluctuate with stock or bond markets

• There is a guarantee of principal protection

• The interest rate is contractually guaranteed for the duration of the term

Once capital is allocated, the rate remains unchanged regardless of market conditions. This removes uncertainty around income planning and eliminates exposure to market-driven price volatility.

Currently, MYGA rates range approximately from:

• Around 4.85% annually for two-year terms

• Up to 6.05% annually for ten-year terms, with options in between

These guarantees can provide a dependable income foundation that supports other investment strategies without forcing income withdrawals during unfavorable market periods.

Building a Stronger Income Base

There is no single solution that fits every retirement plan. Some investors value flexibility and liquidity. Others place greater emphasis on certainty and guarantees. The key is understanding how each option functions and how it contributes to long-term income stability.

A thoughtfully constructed fixed income base can help reduce stress, improve planning confidence, and protect against market-driven income disruptions.

If you are curious what allocating a portion of your portfolio to a multi-year guaranteed annuity could look like, explore our MYGA calculator. By selecting the fixed option, you can view real rates in real time and evaluate how guaranteed income might fit into your broader retirement strategy.

Taking the time to build a reliable income foundation today can help preserve financial independence for years to come.