Pimco Real Return PRRIX provides worthwhile inflation-protected bond exposure, which can help preserve purchasing power in retirement. By Miriam Sjoblom, (CFA) for M* ,Jan 16, 2020
"Despite some noteworthy team turnover, Pimco Real Return's experienced management team and extensive supporting cast of global-bond specialists continue to give it an edge in the inflation-linked bond arena. Given the importance of low fees in this competitive field, the fund's cheapest institutional share classes earn Morningstar Analyst Ratings of Silver and Bronze, while its remaining shares are rated Neutral."
Article Here

@dtconroe
Regarding Tax Cost Ratio (TCR), I don't recall what tax rate / bracket M* uses to calculate the value. The definition M* provides is silent on the topic. For munis, with a TCR of 0% the issue is moot. Perhaps I don't understand TCR fully, but for taxable bond funds, the tax impact is tied to one's specific tax situation / tax rate and whether they are close to a breakpoint in tax brackets. The tax impact of interest / dividends for someone in the 15% tax bracket is different than for someone in the 22% bracket or higher. State and local taxes also need to be considered to get a full picture. Seems like TCR is more a relative vs. absolute measure and one needs to do further due diligence to get the full picture for their particular situation.

Bingo. There is no more 15%. It goes 10,12,22,24,32,35,37.
Most USA households will be at 22% and under because MARRIED FILING JOINTLY is up to $186.4K and especially retirees with lower income at retirement compared to when they used to work.
Let's see how it works in reality. If we compare MWCRX to VCFAX for 3 years. Looking at M* tax tab (link)
Performance pre-tax MWCRX 3.5% VCFAX 5.7%
Performance after-tax MWCRX 2.3% VCFAX 3%. The after tax numbers are way off for tax bracket 10,12,22 and even 24 which goes to $321.45K for Fed income
The above means that the difference between MWCRX to VCFAX is not only 0.7% but much higher.

Boost Your Retirement Income With Tricks The Pros Use
https://www.investors.com/etfs-and-funds/retirement/retirement-income-strategy-pros-use/
Finding retirement income is still a challenge. Interest rates remain low. But you can borrow a key trick financial advisors use to solve this puzzle.
For every $100,000 you invest in this group of funds, you could have created. Bond Fund (PEBIX) for a 4.5% yield plus gains from the bond prices."

The spousal Roth IRA has been discussed here previous; but I'll add this again, as many remain unaware of this provision.
From personal experience, I've helped 12 married couples discover this little known provision. Obviously, a married couple needs to have the financial resources to fund a spousal Roth IRA; but even a few hundred dollars annually makes a difference going forward. The common circumstances I encountered were: one spouse retires several years earlier than the other, or one spouse has a temporary or permanent job loss.
"Generally, you need earned income to contribute to a Roth IRA. For married couples, there is an exception. You can contribute to an IRA for a non-working spouse, up to the maximum annual limit. A spousal Roth IRA isn't a joint account, but can be an effective way for couples to double their retirement savings."
Aside from the IRS link below, do a broad search for spousal Roth IRA to discover more details.
IRS pub. here .....read Spousal IRA section
As always, remain curious,
Catch

@hank I also remember doing a 15-year catch-up provision with my 403 b provider based on the following information and Link

To qualify for the 15-years of service catch-up (if the employer’s plan includes this provision) the employee must have 15 years of service with the same eligible 403(b) employer. The limit on elective deferrals to the participant’s 403(b) account may be increased by up to $3,000 in any taxable year (lifetime employer-by-employer limit of $15,000) if the employee has at least 15 years of service with the same employer in a:
public school system,hospital,home health service agency,health and welfare service agency,church, orconvention or association of churches.

https://irs.gov/retirement-plans/403b-plan-fix-it-guide-an-employee-making-a-15-years-of-service-catch-up-contribution-doesnt-have-the-required-15-years-of-full-time-service-with-the-same-employer

Many nearing retirement seem unaware of the IRS “Catch-up“ provisions. Appears current law allows persons over 50 who were unable to fully fund their retirement plan in prior years to make generous catch-up contributions later on in addition to the current yearly limit. I’m unclear whether it pertains to IRAs, but it appears that at least in some cases it does. My experience more than 2 decades ago (with a 403-B) may no longer be representative. But in my case the “catch-up“ came in darned handy in shoring-up earlier insufficient contributions as retirement neared.
Quick search pulled up 3 reads:
https://www.investopedia.com/terms/c/catchupcontribution.asp - Invesropedia / general description
https://www.irs.gov/retirement-plans/401k-plan-catch-up-contribution-eligibility - IRS / 401K
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions - IRS / mentions IRAs - but I’m unsure of types and amounts.
PS - I should have read John’s article first: “ The maximum amount you can contribute to a traditional IRA for 2020 is $6,000 if you're younger than age 50. Workers age 50 and older can add an extra $1,000 per year as a "catch-up" contribution, bringing the maximum IRA contribution to $7,000. You must have earnings from work to contribute to an IRA, and you can't put more into the account than you earned.”
Perhaps my added emphasis may be helpful to some. :)
From Simon - “Inflation (Consumer Price Index) was up 2.1% in 2019 as of last November” -
While that sounds trite in the face last year’s near 30% return on the S&P, it really depends on perspective. A 2% rise in cost of living (if you believe the numbers) would look quite different following a 30% decline in equities, especially if bonds languished or fell in value. And even at 2% a year, over 5 years you’re looking at well over a 10% increase in COL. (Remember that inflation compounds in a manner similar to how interest does.)

https://finance.yahoo.com/news/much-contribute-traditional-ira-2020-195814096.html
How much you can contribute to traditional or roth ira 2020
Unfortunately for retirement savers, the maximum amount that can be contributed to a traditional IRA in 2020 remains the same as it was in 2019. Let's hope the limit is increased for 2021.
IRA Contribution Limits for 2020
The maximum amount you can contribute to a traditional IRA for 2020 is $6,000 if you're younger than age 50. Workers age 50 and older can add an extra $1,000 per year as a "catch-up" contribution, bringing the maximum IRA contribution to $7,000.

I'd thought I make a second comment about this months edition of Dr. Madell's newsletter.
I find it interesting that Dr. Madell chose five year periods for his study to determine what the next five years might offer investors. This is because I use a rolling five year period to determine what my portfolio's distributions will be. What I do is take (up to) a sum equal to what one half of my five year aveage returns have been as a retirement distribution and I have also found that principal grows over time by leaving the other half for capital formation. This is the way I ran my parents money years back (when they were retired) and it worked well for them growing their principal over time while providing them income to live off of. With this, I figured well if it "aint" broke why try to fix it. Thus, I do the same for me and my wife.
Thank you Dr. Madell @tmadell for writting about your five year study concerning capital formation as I found it to be extremely interesting.
Cordially,
Old_Skeet

"Simon">From my own perspective I've hugely enjoyed reading and digesting this thread. I've learned a great deal and have researched almost every fund mentioned. Thanks to every contributor and dtconroe in particular for starting the discussion and for his exceptionally well informed comments.
My personal circumstances are such that when it comes to bond funds (both mutual and ETFs) all I am looking for is a greater overall return than an online savings account. Let's say anything above 1.8% APY. Preservation of principal is absolutely paramount because I may need to withdraw money on very short notice for my wife's medical expenses due to a back injury. (We both have high deductible plans.) Therefore, I have money in ultrashort duration/ultrashort maturity funds like TRBUX, SEMRX, DLSNX, MINT, and just this week I have opened a position in JPST. All of these I consider cash alternatives with little to no risk to principal. These are in taxable accounts separate from our retirement plans.
The wife and I work for the same employer and we are both around 80% stocks/20% bonds in each of our 401K plans - with 20 and 12 years to go until full retirement respectively. That allocation will of course change as retirement nears. The single bond fund we use (out of a grand choice of only two) is WAPSX. Both of our Roth IRAs are 100% in equity mutual funds because we are very bullish for the coming decade and are prepared to weather the inevitable volatility.
As so many have rightly said - everyone's circumstances are different.
Simon, I appreciate your describing your unique circumstances, and your investing approach to address those circumstances. There are many of us who can identify with your description, and many of us who choose to adjust our investing decisions to accommodate our spouses and their wishes/needs. My wife does not have health issues, but in our joint taxable account, about half of it came from my wife's inheritance of her deceased parents estate. She is very conservative and has made it very clear to me what her risk tolerance is--very very conservative, with very low volatility as a key component of what is chosen for her inheritance and her personal IRA monies. That leads me to trying to find funds that she is comfortable with, not funds I try to force on her.
Best wishes on your investment choices.

Hi @Gary1952,
Welocme to MFO.
Thank you for your question.
This should help provide an understanding of how I govern my portfolio along with how the pieces fit into a master portfolio. The hybrid income sleeve is a big part of my portfolio and is detailed below.
Consolidated Master Portfolio & Sleeve Management System ... Last Revised on 12/31/2019
Now being in retirement here is a brief description of my sleeve management system which I organized to better manage the investments held within mine and my wife's portfolios. The consolidated master portfolio is comprised of two taxable investment accounts, two self directed retirement accounts, a health savings account plus two bank savings accounts. With this, I came up with four investment areas. They are a Cash Area which consist of two sleeves ... an investment cash sleeve and a demand cash sleeve. The next area is the Income Area which consist of two sleeves ... an income sleeve and a hybrid income sleeve. Then there is the Growth & Income Area which has more risk associated with it than the Income Area and it consist of four sleeves ... a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. Then there is the Growth Area where the most risk in the portfolio is found and it consist of five sleeves ... a global growth sleeve, a large/mid cap sleeve, a small/mid cap sleeve, an other investment sleeve plus a special investment (spiff) sleeve. The size of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds held and their amounts. By using the sleeve management system I can get a better picture of my overall investment landscape. I have found it beneficial to Xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly for analysis. All my funds with the exception of those in my health savings account pay their distributions to the Cash Area of the portfolio. This automatically builds cash in the Cash Area to meet the portfolio's disbursement needs (when necessary) with the residual being left for new investment opportunity. Generally, in any one year, I take no more than a sum equal to one half of my portfolio's five year average return. In this way principal builds over time. In addition, most buy/sell transactions settle from, or to, the Cash Area with some net asset exchanges between funds taking place. My rebalance threshold is + (or -) 2% of my neutral allocation for my Income Area, Growth & Income Area and Growth Area while I generally let the Cash Area float. However, at times, I can tactically position by setting a target allocation that is different from the neutral weighting to overweight (or underweight) an area without having to do a forced rebalance. I do an Instant Xray analysis of the portfolio quarterly and make asset weighting adjustments as I feel warranted based upon my assessment of the market(s), my goals, my risk tolerance, my cash needs, etc. I have the portfolio set up in Morningstar's portfolio manager by sleeve, by each area and the portfolio as a whole for easy monitoring plus I use brokerage account statements, Morningstar fund reports, fund fact sheets along with their annual reports to follow my investments. In addition, I use my market barometer and equity weighting matrix system as a guide to assist me in throttling my equity allocation through the use of equity ballast, or a spiff position, when desired. I also maintain a list of positions to add (A) to, to buy (B), to reduce (R), or to sell (S). Generally, funds are assigned to a sleeve based upon a best fit basis. Currently, my investment focus is to position new money into income generating assets. The last major rebalanced process was started during the 4th Quarter of 2018 and was completed in the 1st Quarter of 2019 along some sleeves being reconfigured along with the movement to a new asset allocation.
Portfolio Asset Allocation: Balanced Towards Income ... 20% Cash, 40% Income, 30% Gr & Inc and 10% Growth
CASH AREA: (Weighting Range 15% to 25%, Neutral 20%, Target 15%, Actual 14%)
Demand Cash Sleeve ... Cash Distribution Accrual & Future Investment Accrual
Investment Cash Sleeve ... MMK Funds: AMAXX, TTOXX, PCOXX, CD Ladder & Savings
INCOME AREA: (Weighting Range 35% to 45%, Neutral 40%, Target 40%, Actual 39%)
Income Sleeve: BLADX(A), FLAAX(B), GIFAX, JGIAX(A), LBNDX, NEFZX, PGBAX, PONAX & TSIAX
Hybrid Income Sleeve: APIUX(A), AZNAX(A), BAICX, CTFAX, DIFAX, FBLAX, FISCX, FKINX, FRINX(A), ISFAX, JNBAX & PMAIX
GROWTH & INCOME AREA: (Weighting Range 25% to 35%, Neutral 30%, Target 30%, Actual 32%)
Domestic Equity Sleeve: ANCFX, FDSAX, INUTX(A) & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, HWIAX & LABFX
Global Equity Sleeve: CWGIX, DEQAX, DWGAX(A) & EADIX
Global Hybrid Sleeve: CAIBX, TEQIX & TIBAX
GROWTH & OTHER ASSET AREA: (Weighting Range 5% to 15%, Neutral 10%, Target 15%, Actual 15%)
Large/Mid Cap Sleeve: AGTHX, AMCPX & SPECX
Small/Mid Cap Sleeve: AOFAX, NDVAX & PMDAX
Global Growth Sleeve: ANWPX, NEWFX & SMCWX
Other Investment Sleeve: KAUAX(A), LPEFX & PGUAX
Equity Ballast & Spiff Sleeve: No position held at this time.
In addition, my all weather asset allocation might be of some interest to you as well. Below is my blurb arbout it.
Old_Skeet's All Weather Asset Allocation.
My all weather asset allocation of 20% cash, 40% income and 40% equity affords me everything necessary to meet my needs now being in the distribution phase of investing. The benefit of this asset allocation is that it provides sufficient income, maximizes diversification, minimizes volatility, and provides long-term returns.
The 20% held in cash area provides me ample cash should I need a cash draw over and above what my portfolio generates plus it can provide the capital necessary to fund a special investment position (spiff) should I choose to open one during a stock market pullback. In addition, cash helps stabilize a portfolio during stock market volatility. Example of investments held in this area are cash, money market mutual funds and CD's.
The 40% held in the income area provides me ample income generation to meet my income needs in retirement. It is a well diversified area that incorporates a good number of income generating type funds. Some examples of investments held in this area are ISFAX, PONAX & PGBAX.
The 40% held in the equity area provides me some dividend income along with some growth, that equities generally provide, that offsets the effects of inflation over time. Some examples of investments held in this area are NEWFX, SVAAX, SPECX
Generally, for my income distributions, I take no more than a sum equal to what one half of my five year average total return has been. In this way principal grows over time.
@Gary1952 ... Thanks again for your question. I'm thinking the above information will provide the answer(s) you seek (or might seek) about me (going forward) as to how I govern.
Old_Skeet

If that's your only 2 options I would buy PONAX because it's more of a ballast fund than BHYAX. I would start making adjustments to your asset allocation gradually 5-7 years before retirement.

Hello.
I can understand why this thread has such good interest with members as there are a good number of us on the board that are retired or near retirement seeking income. I have good interest in fixed income and have a decidated income sleeve that makes up about 30% of the income area of my portfolio. The other sleeve is a hybrid income sleeve which accounts for about 70% of the area. I thinking of reconfiguring this mix in my income area by raising the income sleeve to 40% and reducing the hybrid income sleeve to 60% thus having a 40/60 mix. To achomplish this I plan to expand the number of positions in my income sleeve from nine to twelve along with increasing my tax free muni income holdings from one fund (FLAAX) to three (by adding AMHIX and OPAMX) along with adding another multi sector bond fund, possibly FSTAX.
Wishing all ... "Good Investing."
Old_Skeet

From my own perspective I've hugely enjoyed reading and digesting this thread. I've learned a great deal and have researched almost every fund mentioned. Thanks to every contributor and dtconroe in particular for starting the discussion and for his exceptionally well informed comments.
My personal circumstances are such that when it comes to bond funds (both mutual and ETFs) all I am looking for is a greater overall return than an online savings account. Let's say anything above 1.8% APY. Preservation of principal is absolutely paramount because I may need to withdraw money on very short notice for my wife's medical expenses due to a back injury. (We both have high deductible plans.) Therefore, I have money in ultrashort duration/ultrashort maturity funds like TRBUX, SEMRX, DLSNX, MINT, and just this week I have opened a position in JPST. All of these I consider cash alternatives with little to no risk to principal. These are in taxable accounts separate from our retirement plans.
The wife and I work for the same employer and we are both around 80% stocks/20% bonds in each of our 401K plans - with 20 and 12 years to go until full retirement respectively. That allocation will of course change as retirement nears. The single bond fund we use (out of a grand choice of only two) is WAPSX. Both of our Roth IRAs are 100% in equity mutual funds because we are very bullish for the coming decade and are prepared to weather the inevitable volatility.
As so many have rightly said - everyone's circumstances are different.

https://www.kiplinger.com/article/retirement/T047-C032-S014-want-to-beat-boring-cds-munis-can-be-one-way.html
Want to Beat Boring CDs? Munis Can Be a Conservative Way to Increase Yield
Municipal bonds come with some risks that bank CDs don't, but there are ways to minimize them while still getting a better return. Plus, the interest you earn is tax free, and who doesn't love that?

My exposure to bond investing, as well as other asset categories of investing, was through employment retirement programs. Financial Advisors would meet with our employees, and recommend a series of fund options, based on a variety of factors associated with diversification, total return objectives, and various levels of risk. As I experienced the impact of fund performance, in a variety of market conditions, I became much more interested in the funds I owned and how they were performing. At any rate, I reached a point in my life where I was being asked for advice about fund choices, and my standard response was to wade into the bond investing world, with relatively low risk and safer bonds, study what impacted performance, and start forming ideas of how to diversify into other bond categories and learn by ownership to a large extent. I think a good place to begin is to select an investment grade short term bond fund, and move some of your cash out of a banking account, and learn about what is involved in watching some of the fluctuations of performance in this bond fund, in order to produce a higher yield or total return, than you would get from a savings or money market fund. That is a good first step before moving into more risky and more volatile bond funds from other categories--but I always think its important to have a high risk of success with safer options and then slowly evolve to more risky options. Try to learn by owning a fund, and watching performance, but do it in a way where you can minimize odds of trauma with beginning investment decisions.

I spent a lot of time on Page 63.
Paints an interesting picture.
-The negative volatility of stocks is very similar to bonds over a 5 year rolling average...negative 2% vs negative 1%...interesting.
- An all bond portfolio performs equally well compared to a 50/50% (stock/bond) portfolio over a rolling 10 year average...very interesting
- Over long rolling periods (20 years) stocks are 3 times more profitable and less risky than bonds. Or another way of looking at it, it would require only 33% funding in stocks to equal 100% funding in bonds to reach the same financial goal. Also, an all stock portfolio has a greater chance of earning a significantly higher "low end" long term return (6% vs 1%) vs an all bond portfolio over a 20 year rolling period.
Thought on Retirement strategies:
-Fund Long term (rolling 20 year needs) using a 100% stock portfolio, expect 8X on the initial investment.
-Fund short term (1-5 year) retirement needs with 100% bonds
-Fund mid term (rolling 5 years, rolling 10 years, rolling 15 years) retirement needs with a 50/50 portfolio of stocks and bonds. Might look like VWINX (40/60).
Page 62
At age 65, a husband and wife have a 90% that one will live to 80 years old and a 49% chance one will live to 90. Plan for 35 years of retirement withdrawals.
Fund age 65 - 70 withdrawal needs with an all bond portfolio. The likelihood that you will pull money from this portfolio at a loss is lower compared to the 100% equity portfolio and the 50/50 portfolio over this 5 year rolling period. The bond portfolio has a potential maximum loss of (-8%) verses (-15%) for the 50/50 portfolio and (-39%) for the all equity portfolio. Plan for these kinds of negative outcomes (sequence of return risks).
Funds for age 70 - 75 withdrawal needs (5-10 years away) might best be constructed as a balanced 50/50 portfolio. Weigh the risk / reward to ST/low duration bonds or cash like substitutes to the Total Bond Index to the Total Stock Index.
Fund age 75- 80 (10-15 years away) as well as Age 80-85 (15-20 years away) with:
-100% equities which would add more downside risk (only -1%), as well as higher possible positive returns (19%)
- 100% bonds portfolio or 50/50 portfolio provide almost identical returns variances with the 50/50 portfolio having slightly better downside risk. Neither of these two portfolios lost principal. Funding for worse case outcomes plan for the withdrawal amount to at least equal the investment amount.
Fund ages 85-100 withdrawal needs with an all equity portfolio. Determine each years Inflation adjusted withdrawals. Worse case scenario for an all stock portfolio over 20 years is a positive 6%. Fund for the kind of outcome. Fund this portfolio at 33% of the withdrawal need...for example if you will need $10K (in today's dollars) and (inflation adjusted @ 2% for 15 years), your total need would be about $350K for these 15 years of withdrawals, so one would need to fund 33% of $350K or $117K in today's dollars. $117K hopefully grow to at least $350K in 20 years in a buy and hold all equity portfolio.

"What should your retirement wish be for 2020"
Well, my wish is that our health remains in as good shape as our retirement income. At the moment, that may be somewhat optimistic.

https://www.marketwatch.com/story/what-should-your-retirement-wish-be-for-2020-2020-01-08
Opinion: What should your retirement wish be for 2020
Which of the following retirement scenarios would you want to come true in 2020?
Lower interest rates along higher stock and bond prices, or higher interest rates and lower stock and bond markets? If you’re like most retirees and soon-to-be retirees to whom I pose this question, the answer is a no-brainer: Of course your fervent wish is for the former.

Agree with PRDSX. I have it in my T Rowe Roth IRA and won't sell it for at least ten more years as retirement approaches.

I have completed making portfolio adjustments in my retirement portfolio for end of 2019 and beginning of 2020. I attempt to look at funds I am most likely to be able to hold for all of 2020--I don't like to buy and sell frequently, am not good at timing, and prefer funds with a smoother performance pattern and strong downside performance history. Trying to make some adjustments in my Traditional IRA account consumed my most recent considerations. I looked closely at JMSIX, PUCZX, and JMUTX as potential new multisector bond funds to my portfolio--they had excellent performance in 2019, but I ultimately chose to just increase the amount I hold in some existing funds such as VCFAX, PIMIX, IISIX, and SEMMX. These existing funds have lower volatility/standard deviation, and I am more likely to continue holding them in a calendar year, which I suspect may have some challenges with the elections and some global tensions. In short, I wanted to maintain some holdings that look like to have good defensive performance characteristics. I am more focused on preservation of principal, than chasing the performance of recent hot funds.
Best wishes on making choices you feel good about for 2020!