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Overview of Fidelity's Income Replacement Funds

Fidelity's Income Replacement Funds Pay Income Over A Set Amount of Years


Overview of Fidelity’s Income Replacement Funds

Fidelity has fourteen funds that are designed to provide monthly income by paying out principal and earnings over a set amount of time, functioning much like an annuity. One nice feature: the monthly income is intended to keep pace with inflation, and unlike an annuity, you can change your mind, and cash in your investment at any time.

The funds accomplish their goal by gradually liquidating your investment, paying out your entire balance by the time you reach the fund’s target date. Depending on how long you want your money to last, you can select a fund that will have paid out 100% of your balance by 2016 through 2042.

The longer the period of time you select, the less you'll receive each month. The investment mix of each fund will automatically change over time, becoming more conservative as you near the fund's ending date.

Income and principal are not guaranteed. Below are the expected payout rates for three of the funds in this series.

Basics of the Income Replacement Funds

  • Minimum investment: $25,000
  • Expense ratios: .54% - .66%
  • No front end sales charge or surrender charges.

A Sampling of Funds From Fidelity’s Income Replacement Fund Series

  • Income Replacement 2016

    • Targeted payout rate: 13.5%, which means about $1,125 per month, per $100,000 invested

  • Income Replacement 2030

    • Targeted payout rate: 6.5%, which means about $540 per month, per $100,000 invested

  • Income Replacement 2042

    • Targeted payout rate: 4.8%, which means about $400 per month, per $100,000 invested

Link to Fidelity’s Fund Website For Detailed Information on Fidelity’s Income Replacement Funds

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