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Vanguard Managed Payout Fund

Enjoy regular monthly payments after you retire without giving up control of your money.

Get the income you need in retirement

Vanguard Managed Payout Fund* is designed to give you regular monthly payouts that, over time, keep pace with inflation to help you cover your expenses in retirement.

To accomplish this, the fund aims to strike a balance between how much income it will generate and how much principal growth it will pursue.

Receive regular monthly payments automatically

Payment amounts are set in January every year and are expected to remain constant from month to month. The amounts themselves are determined by the fund, which targets an annual distribution rate of 4%.

Why set the target at 4%?

A few important points to keep in mind:

  • Payment amounts could increase or decrease from year to year based on fund performance.
  • Amounts could also change if you make additional investments in—or withdraw money from—your account.
  • A portion of the payment you receive each month could be a "return of capital"—in other words, money you invest could be returned to you to help satisfy that month's payout requirement.

Get a broadly diversified portfolio in a single fund

Because it invests in a number of other Vanguard funds, the Managed Payout Fund gives you access to a broad array of asset classes and investments.

The fund may also look for opportunities for additional diversification through exposure to selected alternative investment strategies—possibly including commodity-linked and market-neutral investments.

Note that the fund isn't guaranteed, so you could lose some of the money you invest.

Pass assets directly to your spouse or other heirs

When you pass away, the assets remaining in your account aren't surrendered. Instead, they can be included as part of your broader estate plan.

Enjoy the low costs you'd expect from Vanguard

With an annual expense ratio of just 0.34%,** you'll lose less of your fund's earnings to operating expenses and keep more in your account, working for you.

Do a quick calculation based on your situation

Tell us how much income you'd like to receive each month, and we'll estimate the total amount you'd need to invest. Or, tell us how much you plan to invest, and we'll estimate how much income you'd receive each month.

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*Vanguard Managed Payout Fund is protected by U.S. Patent Nos. 8,180,695 and 8,185,464.

**Expense ratio is as of March 28, 2014.

The Managed Payout Fund isn't guaranteed to achieve its investment objectives and is subject to loss. In addition, soem of its distributions may be treated in part as a return of capital. The dollar amount of the fund’s monthly cash distributions could go up or down substantially from one year to the next and over time. It's also possible for the fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under its managed-distribution policy. An investment in the fund could lose money over short, intermediate, or even long periods of time because the fund allocates its assets worldwide across different asset classes and investments with specific risk and return characteristics. Diversification doesn't ensure a profit or protect against a loss in a declining market. The fund is proportionately subject to the risks associated with its underlying funds, which may invest in stocks (including stocks issued by REITs), bonds, cash, inflation-linked investments, commodity-linked investments, long/short market-neutral investments, and leveraged absolute return investments.

The Managed Payout Fund may not be appropriate for all investors. For example, depending on the time horizon, retirement income needs, and tax bracket, an investment in the fund might not be appropriate for younger investors not currently in retirement, for investors under age 59½ who may hold the fund in an IRA other tax-advantaged account, or for participants in employer-sponsored plans. Investors who hold the fund within a tax-advantaged retirement account should consult their tax advisors to discuss tax consequences that could result if payments are distributed from their account prior to age 59½ or if they plan to use the fund, in whole or in part, to meet their required minimum distribution (RMD) obligations. Distributions from the fund are unlikely to precisely match an investor's IRA RMD obligations. In addition, use of the fund may be restricted in employer-sponsored plans by the terms of the governing plan documents and/or at the discretion of the plan administrator. Review the information carefully with your financial advisor before deciding whether the fund is right for you.

The calculator is for illustrative purposes only and is not indicative of any investment. This calculator is not intended to project or predict the present or future value of an actual holding. Past performance is no guarantee of future results. Monthly payouts are calculated based on the fund's annual distribution rate and the fund's average share price over the past three years. Monthly payouts do not reflect the most recent closing NAV. The exact calculation, including an initial transition period, is explained in detail in the prospectus. The dollar amount of the fund's monthly cash distributions could go up or down substantially from one year to the next and over time. Actual initial monthly payouts may vary slightly due to rounding. Buying additional shares of the fund or selling fund shares will proportionately increase or decrease, respectively, the dollar amount of a shareholder's future monthly payouts.

Before investing, consider the fund's investment objectives, strategies, risks, fees, and expenses. Carefully read the prospectus that contains this information.

Vanguard provides its services to the Vanguard funds and ETFs at cost.

Nonretirement accounts, Roth and traditional IRAs, SEP-IRAs, UGMA/UTMA accounts, and education savings accounts (ESAs)
We charge a $20 annual account service fee for each Vanguard fund with a balance of less than $10,000 in an account. This fee doesn't apply if you sign up for account access on vanguard.com and choose electronic delivery of statements, confirmations, reports, prospectuses, and other important documents. This fee is automatically waived for Voyager, Voyager Select, Flagship, and Flagship Select Services clients.

SIMPLE IRAs
We charge participants a $25 annual account service fee for each fund they hold in their Vanguard SIMPLE IRA. This fee is automatically waived for Voyager, Voyager Select, Flagship, and Flagship Select Services clients.

403(b)(7) plans
We charge participants a $15 annual account service fee for each fund they hold in their Vanguard 403(b)(7) account. This fee is automatically waived for Voyager, Voyager Select, Flagship, and Flagship Select Services clients.

Individual 401(k) plans
We charge participants a $20 annual account service fee for each fund they hold in their Vanguard Individual 401(k) account. This fee is automatically waived for everyone in the plan if at least one participant is a Voyager, Voyager Select, Flagship, or Flagship Select Services client.

Research from Vanguard and other retirement income experts has found that, by limiting spending to 4% of a portfolio each year, retirees have a higher probability of maintaining a stable income stream—one that can be sustained over the typical retirement period of 20–30 years, even in a low-interest-rate environment.

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