A revealing article appeared not long ago in the Wall Street Journal, titled “Turn Your Nest Egg Into Steady Cash.”  Its author, Staff Reporter Kelly Greene, instructively compared two routes by which retirees might invest their available cash so to obtain a steady flow of income.  The methods offered were predictable: an insurance company annuity or a mutual fund’s payout fund.  Both techniques are highly promoted by their respective industries.  Unfortunately, each presents notable defects that Ms. Greene, a thoroughly competent financial columnist specializing in retirement planning, alluded to in her analysis.

The annuity route, both fixed and variable, does not entice me.  The industry specializes in high fees and burdensome withdrawal penalties.  In addition, the initial cost of the annuity is lost to your forever.  An added disadvantage is that the payments you receive become worth relatively less over time.  In general, the annuity is not a device by which you will grow old in comfort.

The mutual-fund industry’s alternative, referred to as “managed payout” or “target distribution” funds, introduces uncertainties of its own.  Although the management fees are somewhat less, and the amount you invest does not automatically cease to be yours, there are no assurances that cash flow will continue at a predicted rate.  If the mutual fund managers guess wrong in their investment decisions, you may find your income stream reduced to little or nothing . . . with no recourse.

If you now expect me to recommend a technique by which you can realize a predictable annual return on your money of 10 percent or greater, I must disappoint you.  Although I regularly generate this for myself, it constitutes an active and time-consuming business, not passive investment.  Most persons are neither inclined to nor capable of involvement of this sort.  Don’t expect significantly higher yields than are offered by most FDIC-insured institutions.  And by the way, avoid like the plague promoters of programs that offer spectacular returns, sometimes up to 30 percent per month.  No good comes of that.

So what do I suggest?  You’ll be reasonably well off with a mixture of certificates of deposit, bank money market accounts, U.S. Treasury notes, and short or intermediate-term high-grade corporate bonds.  Admittedly, you’ll not beat the world in this way, but neither will the world beat you.  The advantages are that fees and costs are minimal, risk is slight, and your cash flow is easily predictable.  And of equal importance, you need retain no financial advisor to supervise your selections.  It’s a simple program to operate, with little to go wrong.