Do Fidelity Freedom funds consistently provide income?

[UpQuark]

Does anyone here have older (like 2015, 2010, etc) Fidelity Freedom retirement-year funds, if so, do they continue to produce income dependably?

Most of my tIRA money is in the 2020 and 2025 year Freedom funds and they have paid out really decent capital gain and dividend income the past 5 years.

I don't know if the income is something I can count on going forward. I tried asking my Fidelity advisor and he said no they wouldn't keep paying like they have, but when I read the fund objectives they say the number one objective after the retirement year is to produce income.

So far the funds seem to pay approx the same as an annuity would, though I'm not sure because the amount per year varies a lot (looks like ranging from 4 pct to 11 pct).

What have been your experiences with these funds after the retirement year?

 

[arcyallen]

Those funds are intended to continuously push the income up while lowering the overall growth over the years. More consistency and income, less growth as time goes on. They're basically changing the fund's asset allocation over time to serve the generic risk tolerance of someone who was or will be retiring in the year 2xxx. I don't know if I'd be comfortable saying you could "count on the income", but the goal of the fund over time would be to deliver that.

 

[marko]

Go to Yahoo Finance. You can punch in the ticker and then toggle "historical data" and see dividends, cap gains etc paid over many years.

I have TR Price 2015 holdings and it has paid consistent ( though never exactly the same) dividends since I started 18 years ago, although cap gains were zero in the '09 period. I'd assume Fidos 2015 would have been similar.

Some years, cap gains can be extraordinary and other years nil, so that might explain the range. Dividends are more consistent.

 

[Surewhitey]

The fact that it's 50% bonds, you should get a bit of income consistency. The expenses are a bit high for me.

The closest I have is a 35B/65S fund with VG Wellesley Admiral share with .16% fees, but it is not a fund of funds and a bit more specific.

 

[marko]

The other thing to consider is that these 20XX lifestyle funds regularly pay out year-end cap gains. For myself, I consider them "dividends" insofar as it’s a form of payment that doesn't involve selling shares. (Let’s not get into the finer points here)

2009 and 2010 were the only years where the cap gains were negligible but in general, they will represent the bulk of the annual payout for those funds.

 

[redraptor]

I have a 2030 from my previous employer. Hopefully it pans out.

 

[OldShooter]

I looked into target date funds a few years ago and was astonished to find a huge variety of asset allocation strategies. Percentages for a given age vary, some AAs adjust smoothly with age, others in steps. One had a fixed AA beginning at the target date.

So if Fido is not doing what you like, you can shop other target date funds for an AA you prefer. Remember, too, the the target date is just a number. You can buy more conservatively by buying a date prior to your actual planned retirement or you can buy more aggressively by buying a date later than your planned retirement.

They are just mutual funds; you are not married to this one.

 

[yakers]

I tend to prefer balanced funds like Wellsley & Wellington over target date funds although the one virtue a target date fund has is as a one fund that one can have through work & retired life and just not think too much about investments. The Federal TSP has these and it ends up as an income fund so it can be a good siple choice for many.

 

[jollystomper]

I have had the Fidelity Freedom 2015 fund in my IRA since 2011, as my personal "balance" against the Fidelity Growth company fund I own there (since I first opened the IRA in the early 2000s). It has generated an increasing amount of income over the years (some of this due to reinvesting). I do not know what you might define as "dependable", but there have been both dividend and capital gains income in every year. It is not a large part of my portfolio, so I have pretty much left it in "set and forget" mode for now.

 

[Out-to-Lunch]

Also note that there are two different series. There are the the Fidelity Freedom and the Fidelity Freedom Index funds. THey have very different holdings.