FROM SAVING TO SPENDING: RETIREMENT PLANNING WITH ETFs

• 40% of independent savers feel off-track for retirement¹, not saving enough money to retire on their terms.
• ETF innovation has made it easier than ever to access sophisticated investment solutions that can simplify the retirement journey.
• iShares ETFs can help build and manage savings through the accumulation phase and manage spending through the decumulation phase.

Retirement is a dream for most workers. It may look like getting out of the 9-to-5 grind to sit on the beach, travel the world, dedicate yourself to a cause, or just take time to spend with loved ones. To make this dream a reality requires a plan — and time to execute the plan.

Whether you’re saving for retirement, known as the accumulation phase, or looking to manage your assets in retirement (decumulation), ETF innovation has made accessing sophisticated investment solutions easier than ever. Here’s a breakdown of various ways to plan for retirement and manage your money during those “golden years.”

If possible, use tax deferred accounts to build those retirement dollars.

• Max out your 401(k) — The IRS allows employees to contribute $23,500 to their 401(k) plan and an additional $7,500 per year for workers over 50. Many employers also provide a company match and some may even offer a Roth 401(k) option. Getting the company match and a curated investment menu can help many workers get started with retirement planning.
• Consider an IRA - If you’re one of the millions of Americans without access to a workplace retirement plan, consider contributing to an Individual Retirement account (IRA). This account type requires you to set it up and make investment choices yourself. IRAs are also subject to contribution limits. For example, the 2025 calendar year has a $7,000 limit if you are under age 50. For those over age 50, you can contribute $8,000 per year. Roth accounts are subject to income limits.

LEARN MORE: How to Plan For Retirement If You’re Self-Employed.

Once you have contributed to these accounts, you can boost your savings in a taxable brokerage account. The advantage of saving for retirement within a taxable brokerage account is that there are no contribution limits. However, the income and gains are subject to taxes.

iShares Lifepath Target Date ETFs are designed to seek the right risk at the right time. LifePath ETFs are managed by professionals who adjust the underlying fund holdings over time to navigate market changes such as inflation and volatility so that the investments reflect the goals, from saving for retirement to receiving retirement income. Decades before retirement, the ETF focuses on growth through a greater allocation to stocks. As retirement gets closer, more bonds are added to the mix to seek extra stability while still targeting growth.

LEARN MORE: How to select the right target date ETF.

If you prefer to select your own mix of investments, investing in a diversified portfolio of iShares Core ETFs can help you meet your retirement goals based on your risk tolerance. Start building your portfolio today.

One challenge for many investors approaching retirement is the potential of a large drawdown in the stock or bond markets. For example, 2008 resulted in over a 30% loss on stocks and 2022 saw some bond funds draw down by 13%.²

iShares Outcome ETFs are innovative, options-based strategies designed to help investors meet specific investing goals. These products can play a powerful role in portfolios offering benefits such as enhanced yield potential and sophisticated risk management.

The search for protection doesn’t have to mean giving up equity market exposure. iShares Buffer ETFs reduce the impact of market volatility by offering built-in protection against losses, which is critical for pre-retirees avoiding sequence of returns risk.

When it comes time to start spending your retirement savings, most investors are looking for steady income. Remember, you’re not just investing for retirement but through it.

IShares iBonds ETFs are term maturity ETFs that hold a diversified portfolio of bonds with similar maturity dates. iBonds are designed to mature like a bond, trade like a stock and diversify your portfolio like a fund. They can provide a simple solution for those looking to put their spending needs on autopilot.

You can build a bond ladder with the amount of money that you need for the following calendar year. For example, if you need $50,000 in retirement each year and have saved $1.25 million, you can invest about $500,000 ($50,000 each year for 10 years) in a series of iBonds ETFs that will mature in 2025 to 2035 to help meet your spending needs. The rest of your savings can then remain invested for potential long-term growth. Offered in U.S. Treasuries, U.S. TIPS, municipals, investment grade and high yield corporates, iBonds ETFs can help address spending needs.

iBonds ETFs can also be helpful in managing your Required Minimum Distributions (RMDs) or in creating a bridge for those who want to delay applying for Social Security benefits, as detailed below.

Required minimum distributions (RMDs). Investors must take a withdrawal from their retirement account when the account holder turns 72 (73 if they reach age 72 after 12/31/2022). The Internal Revenue Service (IRS) requires a minimum amount to be withdrawn each year thereafter, known as the RMD. From ages 72 to 82, investors will need to withdraw almost 45% of the account value.³

As shown as a hypothetical example in the table below, a single retiree turning 72-years old in 2025 has $100,000 invested in an IRA. This investor must withdraw RMDs according to the IRS Uniform Lifetime Tables, by dividing the account size by the distribution period for each year. iBonds ETFs can potentially be used to ladder out the first 10 years of RMDs and any remaining assets in the account can be invested in other assets. Since iBonds ETFs mature in mid-October or December, investors will have cash in their accounts to help meet these IRS-mandated withdrawals before year-end.

Using iBonds ETFs to ladder out the first 10 years of RMDs

Social Security payments can increase as retirees wait to collect their benefits. For most U.S. citizens, full retirement age is between 65 to 67 years old. Social Security benefits increase by 8% per year if the retiree waits until age 70 to begin collecting the funds.⁴

However, most investors retire sooner with average retirement age of 61 years, according to a 2022 Gallup survey.⁵ Stopping work at age 61 could result in a 4 — to 9-year gap before collecting the maximum Social Security benefits. iBonds ETFs can be used as a decumulation strategy to help fill the gap — known as a Social Security bridge. When the iBonds ETF matures, the proceeds can be used for the following year.

With the wide range of ETFs available today, investors have more access to sophisticated investment solutions that can simplify saving for and spending in retirement.