7 Best Funds for Retirement
A well-planned retirement should draw income from multiple sources. These can include Social Security, annuities and rental income.
But more commonly in today’s self-directed landscape that has replaced traditional pensions, the focus is on assets held in accounts like a Roth IRA or 401(k).
For these accounts, tax efficiency is less of a concern, so fund selection tends to be simpler. The goal is straightforward: For those planning for retirement, grow capital without taking undue risks, and for those already retired, sustain enough income to support withdrawal needs.
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While every retiree’s situation differs, some basic rules apply broadly. The first is diversification. Retirement-centered funds should avoid narrow bets on a single sector or geography and instead spread risk across sectors, countries and company sizes.
Equally important are fees. Every dollar deducted from returns compounds into a larger drag over time, so keeping costs low is critical. Investors should also steer clear of non-value-added charges, such as sales loads or 12b-1 marketing fees, which only serve to benefit intermediaries rather than shareholders.
“We focus on a few critical factors when selecting funds for retirees: fees, historical performance and how volatile a fund is compared to its benchmark,” says Brandon Clark, direction of financial planning at the Clark Group Asset Management. “To manage this balance, we often use ‘pairings’ of funds that are designed to offset each other’s risks.”
Here are seven of the best mutual funds and exchange-traded funds (ETFs) for retirement today:
| Fund | Expense ratio |
| Vanguard Target Retirement 2060 Fund (ticker: VTTSX) | 0.08% |
| Vanguard LifeStrategy Growth Fund (VASGX) | 0.14% |
| Vanguard Wellington Fund Investor Shares (VWELX) | 0.25% |
| Vanguard Wellesley Income Fund Investor Shares (VWINX) | 0.23% |
| Schwab U.S. Large-Cap Value ETF (SCHV) | 0.04% |
| Schwab U.S. Dividend Equity ETF (SCHD) | 0.06% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 0.56% |
Vanguard Target Retirement 2060 Fund (VTTSX)
“For more than 20 years, Vanguard’s target retirement funds have provided a low-cost, highly diversified index-based approach designed to get investors to and through retirement,” says Brian Miller, senior investment director on the multi-asset solutions team at Vanguard. These all-in-one mutual funds come in a variety of vintages and are distinguished by the year in their name.
For example, investors looking to retire around 2060 can opt for VTTSX. In 2025, this fund allocates 90% to global equities and 10% to global fixed income. But as the years pass, VTTSX will dynamically adjust its allocation to become more conservative. As the target retirement date of 2060 draws closer, this fund will become more bond-heavy, with a lower proportion of stocks. VTTSX charges a 0.08% expense ratio.
Vanguard LifeStrategy Growth Fund (VASGX)
“Vanguard’s LifeStrategy Funds are a series of portfolios that feature various asset allocation strategies that align with an investor’s risk tolerance,” Miller says. “These broadly diversified, low-cost funds are designed to provide a complete portfolio in a single fund and aim to help investors manage risk while growing their savings.” For younger investors planning for retirement, VASGX may be ideal.
This fund prioritizes capital appreciation with the potential for modest income generation. VASGX achieves these goals by allocating 80% of its portfolio to global equities, with the remaining 20% allocated to global bonds. The portfolio is rebalanced periodically back to an 80/20 allocation to systematically buy low and sell high. This all-in-one approach costs a 0.14% expense ratio.
Vanguard Wellington Fund Investor Shares (VWELX)
Not all of Vanguard’s retirement-focused funds are index-based strategies. Some of the firm’s best performing and longest standing funds are actively managed. A great example is VWELX, which has been around since 1929. This fund holds a mixture of two-thirds dividend stocks screened for value and quality, along with a one-third allocation to intermediate-duration, investment-grade bonds.
“VWELX is a moderate-to-moderately-aggressive fund with a higher allocation to stocks than bonds, which might be appropriate for someone that wanted to risk more price volatility in order to possibly see more potential for total return growth from their retirement fund,” says Michael Schulman, partner and chief investment officer at Running Point Capital Advisors. The fund charges a 0.25% expense ratio.
Vanguard Wellesley Income Fund Investor Shares (VWINX)
“VWINX is a solid balanced mutual fund that seeks sustainable income along with moderate long-term capital appreciation by investing 60% to 65% of its assets in investment-grade corporate, U.S. Treasury and government agency bonds, and approximately 35% to 40% in U.S. large-cap stocks with a value tilt,” Schulman explains. This fund is essentially the lower-risk, income-focused alternative to VWELX.
“Overall, VWINX is a moderately conservative fund with a higher allocation to bonds than stocks, which might be appropriate for someone that wanted to see more income growth than capital growth,” Schulman says. The fund delivers an above-average 3.8% 30-day SEC yield. However, VWINX’s tax efficiency isn’t the best, so retirees may want to prioritize this fund for a Roth IRA.
[READ: 5 Great Fixed-Income Funds to Buy for 2025]
Schwab U.S. Large-Cap Value ETF (SCHV)
“By carefully analyzing beta and comparing across asset classes such as large-cap growth versus large-cap value, we can pair funds in a way that potentially lowers overall risk while still capturing attractive returns, all while keeping costs low,” Clark explains. “The result is what retirement-focused investors ultimately want: stronger risk-adjusted returns, not just raw performance numbers.”
Following Clark’s guidelines, retirees aiming to offset the large-cap growth bias that dominates broad market benchmarks like the S&P 500 may find value ETFs such as SCHV to be a good complement. SCHV charges a low 0.04% expense ratio, and is notably less concentrated in both its top 10 holdings and the technology sector compared with the overall U.S. stock market at present.
Schwab U.S. Dividend Equity ETF (SCHD)
Another way to introduce a value tilt is by focusing on dividend-paying stocks. Dividends can provide steady income and often come from mature, financially stable companies that trade at more reasonable valuations. For this role, SCHD is worth considering. It charges a 0.06% expense ratio and offers a 3.8% 30-day SEC yield, which is fairly tax efficient due to its exclusion of real estate investment trusts (REITs).
Despite its low fee, SCHD is a relatively complex ETF. Its benchmark, the Dow Jones U.S. Dividend 100 Index, requires at least 10 years of dividend payments and applies a composite screen for free cash flow to total debt, return on equity, dividend yield and five-year dividend growth rate. With dividends reinvested and net of taxes, SCHD has returned an annualized 11.1% over the past decade.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
“DIVO is designed to deliver consistent, tax-efficient income by combining dividend-paying large-cap stocks with a tactical covered-call strategy,” explains Nathan Miller, vice president of product development at Amplify ETFs. “Returns come from three sources: dividends, option premiums and capital appreciation.” The ETF currently pays an above-average 4.9% distribution yield.
Unlike most covered call ETFs, DIVO has also delivered strong total returns. It has earned a five-star Morningstar rating, meaning it outperformed the majority of its peer category on a risk-adjusted basis. “On top of the inherent tax-efficient benefits of the ETF wrapper, a key advantage for DIVO is that option premiums are often classified as return of capital, which can defer taxes,” Miller explains.
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7 Best Funds for Retirement originally appeared on usnews.com
Update 08/25/25: This story was previously published at an earlier date and has been updated with new information.