3 Income-Focused Products for Retirees

Welcome to the world of income-focused products for retirees! Once we retire, living off our investments becomes essential. Many people rely on income products to achieve their financial goals. Today, we’ll review three types of products across low, medium, and high complexity.

Get ready for honest opinions, surprising facts, and tips to avoid costly mistakes!

You’ll Learn

Complexity Levels in Retirement Products
The world of retirement investing is massive. Some products are simple and easy to understand, while others are highly complex and riskier.

Low Complexity: Products like cash accounts or target date retirement funds.
Medium Complexity: Dividend stocks and ETFs, offering more control but needing more management.
High Complexity: Products like YieldMax ETFs, highly speculative and more complex to grasp.

Target Date Retirement Income Funds (Low Complexity)
These are “set-it-and-forget-it” products. You pick a target retirement year, and the fund automatically adjusts its strategy as you approach that date.

Pros:
- Automatic rebalancing by professionals
- Becomes more conservative with time
- Simplified management for retirees
Cons:
- Fees can be high (up to 2%)
- Limited customization
- Income may fluctuate
Best For: Investors who want a stress-free, all-inclusive approach to retirement investing.

Dividend ETFs (Medium Complexity)
Dividend ETFs provide diversified exposure to dividend-paying companies without the need to select individual stocks.

Pros:
- Professional management with low fees
- Various strategies to tailor your income
- Transparent holdings and easy access
Cons:
- Some ETFs still have relatively high fees
- Complex strategies can confuse investors
- Risk of over-diversification if not careful
Best For: Investors who want solid income and diversification but prefer a hands-off approach to stock picking.

YieldMax ETFs (High Complexity)
These products promise huge yields but come with significant risks that many investors underestimate.

Reality Check:
- Yields as high as 50% may seem tempting, but price drops and distribution cuts are frequent.
- Example: TSLY (Tesla YieldMax) fell from $40 to under $10 in less than 3 years, with massive distribution drops.
Best For: Honestly, they are not suited for anyone relying on stable retirement income.

Building a Sustainable Retirement Income Portfolio
A successful retirement portfolio should balance income needs with growth potential while managing risks.

Golden Rules:
- Fully understand what you own.
- Keep diversification meaningful and straightforward.
- Maintain a cash reserve to weather market downturns.
- Stick to a sustainable withdrawal rate (preferably 4% or less).

Looking for Retirement Income? Here’s Your Guide!

This free guide reviews 20 income-focused products. In the one-page summaries, we highlight the pros and cons, common mistakes to avoid, and who should use them.

We also created a rating system to highlight the difference between each product. The idea is to provide you with as much information as possible so you can make the right choice for your situation.

While there is no free lunch in finance, there are multiple ways to reach your retirement goals.

Download The Canadian Retiree’s Guide to Income-Producing Investments Now!