Helping Retirees Translate Savings into Income, Capital Group Announces Target Date Withdrawal Ranges

Withdrawal ranges help retirees plan for income, navigate market uncertainty and balance spending needs with the risk of outliving their savings

LOS ANGELES, Oct. 21, 2026 /PRNewswire/ -- Capital Group, one of the world's largest and most experienced active investment managers, announced the publication of research-based target date withdrawal ranges designed to help retirees translate their accumulated savings into sustainable retirement income. The framework provides two simple withdrawal approaches that can support retirees' income needs. At the same time, Capital Group has renamed its in-retirement target date funds to include the phrase "retirement income" to more clearly reflect their role as retirement income solutions.

"These withdrawal ranges are not a one-size-fits-all prescription or guarantee, but they provide a clear starting point for discussions with investors, advisors, plan sponsors and institutional consultants, to consider the trade-offs between seeking income stability and asset preservation," said Kelly Campbell, Director, Multi-asset Solutions Asset Class Lead at Capital Group. "As the world's largest active target date manager,¹ Capital Group is focused on helping investors navigate not only the savings journey, but also the complex transition into spending in retirement."

How the withdrawal ranges work: two retirement income approaches²

• Fixed dollar, inflation-indexed withdrawals: 4.0% to 4.5% 

Withdrawals are taken as an annual percentage of the total account balance at retirement, adjusted for inflation each year. This approach can result in a predictable income stream but has a higher risk of depletion in later retirement, in adverse market environments. Fixed withdrawals may be a good option for retirees with limited spending flexibility who rely on their withdrawals for fixed expenses like housing and healthcare.

• Variable dollar, year-end balanced based approach: 5.0% to 5.5%

Withdrawals are taken as an annual percentage of the prior year's ending balance. This approach results in variable annual income dependent on the prior year's market returns, although it has a lower risk of depletion than fixed withdrawals. It may be appropriate for retirees with greater spending flexibility, or those with a legacy goal.

The withdrawal ranges are based on Capital Group's Capital Market Assumptions (CMAs)³ as well as modeling over 100,000 possible retirement paths and stress testing hypothetical scenarios such as market drawdowns, inflation surprises, potential Social Security benefit reductions, and late-life healthcare spending shocks. Capital Group's target date glide path is managed for 30 years through retirement and shifts toward income and capital preservation in later years.

"As people enter retirement with meaningful assets saved in their retirement plan, the question is no longer only how to save — it's how to spend, particularly as retirees navigate market volatility, persistent inflation and uncertainty around Social Security," said Michelle Black, Solutions Portfolio Manager at Capital Group. "Our priority is helping provide investors with a diversified portfolio that meets their retirement needs at every stage. During retirement, our target date series increases the focus on assets that can provide income and potential capital preservation. Together with our withdrawal ranges, investors now have a useful framework for determining how to spend their savings throughout retirement."

Adding income to the name

Additionally, by renaming its 2010-2025 target date funds to include "retirement income," Capital Group has made it easier for retirement plan sponsors, participants, and advisors to identify fund options built for the distribution phase. The change clearly signals that the funds are designed to support investors' long-term retirement income needs.

Capital Group has published supporting research which provides additional context on investors' retirement income challenges, the modeling approaches used to develop the withdrawal ranges, and the trade-offs between fixed and variable withdrawal regimes under a variety of scenarios. You can read the full report here.

Footnotes

¹Source: Sway Research: The State of the Target Date Market: Mid-Year 2026.

²Withdrawal rates are suggestions only and should be evaluated over time. These ranges are a starting point for discussion; the actual rate should be determined by the financial professional and retiree based on the individual's facts and circumstances. The withdrawal rate may need to be adjusted to maintain sustainability in various market conditions. Rates should be determined by individual investors as one part of their total retirement income picture, including Social Security or other sources of guaranteed or interest income.

³The withdrawal ranges and modeling presented use Capital Group's valuation-independent capital market assumptions (CMAs), which are derived from historical market proxies estimating the return, risk and correlation characteristics of the underlying sub-asset-class exposures within the glide paths for Capital Group's all-active and Blend target date strategies. To arrive at these hypothetical outcomes, we used a Monte Carlo simulation to evaluate 100,000 hypothetical return paths across a broad range of potential market scenarios, including adverse outcomes, and excluded the potential impact (positive or negative) of active management. These analyses therefore reflect market-based assumptions and are presented for informational purposes only; they are not intended to represent specific performance or outcomes of the Capital Group Target Date Retirement Strategies.

About Capital Group

As Capital Group approaches its 100th anniversary in 2031, its long-term strategy remains firmly rooted in its mission to improve people's lives through successful investing. With over 9,000 associates and 35 offices around the world, Capital Group manages $3.6 trillion in assets for millions of wealth management and institutional clients around the world^*. 

^*As of June 30, 2026.

For more information, visit capitalgroup.com.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

Although the target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met. Investment professionals manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

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