Capital Group publishes 4% to 5.5% target date withdrawal ranges

Capital Group published research-based withdrawal ranges of 4% to 5.5% for retirees spending from its target date funds on Oct. 21. The fixed-dollar, inflation-indexed version is set at 4.0% to 4.5%.

The same announcement renamed the 2010 through 2025 target date funds to include the phrase "retirement income." The company said the change makes it easier for plan sponsors, participants and advisers to identify funds built for the distribution phase.

The ranges rest on Capital Group's capital market assumptions and on modeling of more than 100,000 possible retirement paths, stress-tested against market drawdowns, inflation surprises, potential Social Security benefit reductions and late-life healthcare spending shocks. The glide path is managed for 30 years through retirement and shifts toward income and capital preservation in the later years.

The fixed-dollar approach takes a set annual percentage of the account balance at retirement, adjusted for inflation each year. Capital Group describes the trade-off directly: a predictable income stream, but a higher risk of depletion in later retirement if markets turn adverse.

"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 and multi-asset solutions asset class lead at Capital Group. Campbell described the firm in the same statement as the world's largest active target date manager.

The size of the audience is what separates this from a research paper. Capital Group manages $3.6 trillion and counts more than 11 million participants in its target date series. A published withdrawal range reaches savers who have never sat down to pick a decumulation strategy. As this publication argued in September, the default rather than the annuity shelf now decides retirement income, and a range printed alongside the glide path is that mechanism extended to the payout side.

Schroders' 2026 survey found 51 percent of retirees report no strategy for converting savings into income, which is the group a documented starting range is written for.

A retiree with $500,000 at retirement would draw $20,000 to $22,500 in the first year under that approach, indexed each year after.