Vanguard offers a variety of retirement funds that have gained popularity among retirees over the years. These funds provide professionally managed accounts and services to help Americans prepare for retirement. A 2024 study by Vanguard found that employer contributions to 401(k) plans are highly concentrated, with 44% of dollars going to the top 20% of earners.
This highlights the income inequalities that exist in retirement planning. Despite the importance of saving for retirement, many Americans feel unprepared. A poll from the American Savings Education Council in early 2024 revealed that those aged 45-54 feel the least prepared to retire.
Only 39% have a plan in place to retire at their desired age. Inflation remains a major concern for retirees, causing many to lack trust in retirement funds. An increasing number of Americans are working past the traditional retirement age of 65.
This trend is expected to continue in 2025, with more Americans reaching 65 than ever before, according to research by the Alliance for Lifetime Income. To address these challenges, programs like automatic enrollment, matching contributions, financial literacy education, and multiple employer plans are on the rise. Legislative policies such as the SECURE 2.0 Act are also making retirement more accessible for long-term workers.
The assisted living community sector plays a crucial role in providing care and companionship for seniors in their final years.
Vanguard funds for retirees’ growth
The market was valued at $91.8 billion in 2022 and is projected to grow at a compound annual rate of 5.53% from 2023 to 2030.
Among Vanguard’s retirement fund offerings, the Vanguard Mega Cap Growth Index Fund (MGK) stands out as a top choice for retirees seeking growth potential. MGK tracks the CRSP US Mega Cap Index, which includes about 70% of the largest publicly listed firms in the U.S.
Tech giant Microsoft Corporation is one of the biggest holdings in MGK’s portfolio. Microsoft’s diverse range of software, services, devices, and its robust cloud computing platform Azure position it well for growth.
Recent evaluations showcase Microsoft’s strength and potential, particularly in AI and cloud services. Another recommended Vanguard fund for retirees is the Vanguard High Dividend Yield Index Adm (VHYAX). This fund offers exposure to U.S. companies that generate higher-than-average dividends.
It benefits pre-retirees through long-term growth potential and dividend reinvestment, while providing retirees with a steady income stream and capital appreciation to combat inflation. Walmart Inc. is a notable holding in VHYAX, known for its robust financial performance and consistent dividend increases over the past 51 years.
The retailer reported strong operational cash flow and free cash flow in the first nine months of 2024. In conclusion, Vanguard’s retirement funds, such as MGK and VHYAX, offer retirees a combination of growth potential, income generation, and stability through diversified portfolios. While these funds present solid investment options, investors may also consider exploring promising AI stocks for potentially higher returns.
Image Credits: Photo by Jamie Street on Unsplash
