Investing for Income 11 Different Ways for MASSMutual Employees and Retirees

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Fixed-income investing can provide an income stream to protect capital and provide financial independence for MASSMutual employees looking to retire comfortably, said Wesley Boudreaux, of The Retirement Group, a division of Wealth Enhancement Group.

'As more MASSMutual employees live longer than expected, an advisor can help you secure the income needed to fund a long retirement through instruments such as bonds and annuities,' said Patrick Ray of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. Creating streams of income for retiring MASSMutual employees.

2. Fixed-income investments include bonds, municipal bonds and preferred stock.

3. Work with a financial advisor to understand investments for retirement income.

Because many MASSMutual employees get more years in retirement, retirees have to carve out streams of income with which to live. That's the goal of investing for income - having enough income to cover your expenses so you can avoid tapping into your principal retirement savings. As a MASSMutual employee, investing for income may be less risky than investing for growth through traditional stock market investments. It's because fixed-income investing aims to help you as a MASSMutual employee preserve your capital so you can draw down ongoing income in interest or dividend form.

That's what makes investing for income a viable option for MASSMutual employees and retirees who like knowing what their investments will provide for them in the future. With this basic understanding of how investing for income can put you on the path to a more predictable retirement outcome than most traditional stock market-based plans can promise, let's look at 11 different ways you can invest for income. Most fixed-income investments are bonds. These have a set amount of interest to pay and a fixed amount to be paid back at maturity, called the par value. What comes to mind first when people think about investing in bonds is government bonds.

Those government bonds are debt securities issued by a government to fund government spending. They're issued by national governments and are considered low risk because they're backed by the government issuing the bonds. One example is a United States debt security backed by the United States. The U.S. Treasury Department also issues U.S. Treasury Bonds. U.S. Treasury Bonds are long-term bonds that mature in 10 to 30 years. But what if you're not a MASSMutual employee who wants to hang your cash for more than 10 years?

So there we have the second way to invest for income:

U.S. Treasury Notes. U.S. Treasury Notes are another type of debt security that the U.S. government issues to fund government spending. The loan also has an advertised interest rate, payable semi-annually until maturity. U.S. Treasury notes are offered at two-, three-, five-, seven- and 10-year terms.

For the MASSMutual employee:

If you think that's still too long to tie up your money, then item # 3 on our list may be for you. U.S. Treasury Bills are short-term debt obligations backed by the United States Treasury Department for terms of one year or less. They come in one, three, six and 12 month maturities. Because they have shorter terms, they will generally charge less interest than the two other options we discussed. We think those are reasonable short-term investments for MASSMutual employees and retirees. What if you want U.S. government bonds? As a MASSMutual employee, maybe you want to put your money where it counts - in something local - that will help local governments with government projects. Look next if that's the case. Municipal bonds are debt securities issued by state and local governments to fund public works and are used mainly to build or improve parks, roads, bridges, libraries or other infrastructure. As a MASSMutual employee, municipal bonds can help preserve capital while earning interest. Some municipal bonds pay no federal taxes and some are tax-free at the state and local levels as well. But interest earned on municipal bonds could affect your social benefits and the tax you might owe on those benefits.

That's why you as a MASSMutual employee should work with a financial advisor who understands retirement planning and saving before you invest in such securities. As a MASSMutual employee you need to know that corporate bonds are debt securities that corporations issue to raise money for ongoing operations, mergers and acquisitions or to expand their business. The term corporate bond is used for debt instruments issued by a corporation with at least one year maturities. Corporate bonds fall under two broad categories. The first is high-grade corporate bonds - investment-grade corporate bonds. The second category is high-yield corporate bonds or junk bonds. The two distinctions are based among other things on the risk that the bondholder assumes by investing in those bonds. Generally speaking, investment-grade corporate bonds will yield less interest than higher-risk, junk bonds. At TRG we work with MASSMutual employees to maximize return with minimum risk. Preferred stocks are equities that pay a fixed dividend and have a par value.

So even if shares' market value drops below par, investors will still receive the fixed dividend payment. Should that company ever redeem or call those shares, those shares are called back at par value. As a MASSMutual employee, you need to know the different classes of equities and stocks to make sound decisions. Mortgage-backed securities are investments secured by a basket of mortgages purchased by the banks that issued them. MBS receives periodic payments similar to bond interest payments. All of the above are options MASSMutual employees and retirees could consider for an investment strategy to generate income. A business development company is a closed-end fund that invests in organizations developing or seeking financial help. BDCs can offer high dividend yields and capital appreciation. BDCs have no par value but have loans to businesses in their portfolios that have par value. People forget about another type of fixed-income investment - Certificates of Deposit (CDs). You pay an agreed rate of interest in return for agreeing not to withdraw money from that account for a specified period of time until the maturity date.

When that CD term ends, the investor gets their principal back. Problem with CDs:

if you have an emergency and need to access those funds now, you could face early withdrawal penalties. You put money in CDs because it is insured by the Federal Deposit Insurance Corporation (FDIC). All of the amounts insured are capped, so check with your bank that the amount you put in that CD is within the limits of insurance. These are sometimes called money market deposit accounts or money market retirement savings accounts and are also considered fixed-income investments - most are backed by the FDIC - and usually carry a higher rate of interest than a traditional retirement savings account and permit account holders to make occasional penalty-free withdrawals. There are just six transactions per month - transfers or withdrawals. A contract between you and an insurance company under which you pay a lump-sum or series of payments and receive regular disbursements is called an annuity. These investments can provide a monthly income for a retiree but must be funded many years before you get any payout.

How to Invest for Income among the 11 ways to Invest for Income There's one common thread:

you can know how much income your investments will provide. Also know when you will get those interest or dividend payments. We say that by investing for income, you know with greater certainty what your financial future holds - certainty that most common stock investments cannot provide. Find out how fixed income investing or other types of investing works in our Retirement learning Library of ebooks and webinars on investing. Since increasingly many MASSMutual employees will live 20 or 30 years in retirement, you owe it to yourself to build stable streams of income you can count on well into your final years in retirement. What if you are one of the few who make it to 100? Rather than waiting for growth in an uncertain stock market, investing for income can reduce the risk that you run out of money before you run out of life. The first is finding a financial advisor who understands planning for retirement and how to best utilize fixed-income investments.

Working with a financial advisor from The Retirement Group means working with a fiduciary who knows how to help you invest for income. A nationwide organization of financial advisors called The Retirement Group. We only plan for and design retirement portfolios for transitioning corporate employees. And each representative of The Group has been hand-picked by The Retirement Group in select cities throughout The United States. Each advisor was screened for pension expertise, financial planning experience and portfolio construction knowledge. TRG believes in teamwork to find solutions to our clients' problems. A conservative investment philosophy guides the team in constructing client portfolios with laddered bonds / CDs / mutual funds / ETFs / annuities / stocks and other investments.

They handle retirement / pensions / tax / asset allocation / estate / elder care issues. This document uses different research tools and techniques. All attempts to estimate future results involve assumptions and judgments and are therefore only tentative estimates. The law, investment climate, interest rates and personal circumstances will all change and will affect how accurate our estimations are and how appropriate our recommendations are. Such a plan requires ongoing change sensitivities as well as constant re-examination and alteration of the plan. So update your plan a few months before your expected retirement date and do an annual review.

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Nothing contained herein shall be construed as an attempt by The Retirement Group, LLC or any of its employees to practice law or accounting. We look forward to speaking with any tax and/or legal professionals you may select regarding the implications of our recommendations. Through your retirement years, we will continue to update you on issues affecting your retirement via our complimentary and proprietary newsletters, workshops & periodic updates. Or call us at (800) 900-5867.

Sources:

1. Brandon, Emily. '7 High-Return, Low-Risk Investments for Retirees.'  U.S. News & World Report , Feb. 2025,  www.money.usnews.com/investing/articles/high-return-low-risk-investments-for-retirees?utm_source=chatgpt.com .

2. 'Investment Options to Generate Income in Retirement.'  U.S. Bank , Feb. 2025,  www.usbank.com/retirement-planning/financial-perspectives/investment-options-to-generate-retirement-income.html?utm_source=chatgpt.com .

3. 'The Benefits of a Diversified Retirement Portfolio.'  TIAA , Feb. 2025,  www.tiaa.org/public/learn/lifetime-income/retirement-portfolio-diversification-strategies?utm_source=chatgpt.com .

4. 'Finding Fixed Income Investments for Retirement.'  Charles Schwab , Sept. 2023,  www.schwab.com/learn/story/finding-fixed-income-investments-retirement?utm_source=chatgpt.com .

5.'Fixed Income for Retirement.'  M1 Finance , Jan. 2025,  www.m1.com/knowledge-bank/fixed-income-for-retirement/?utm_source=chatgpt.com .