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How to create regular income for yourself in retirement?

24 June 2022

Most of us dream about receiving a regular and consistent stream of income during our retirement years. But how achievable is this goal? The truth is, even if you do not enjoy the benefits of a well-funded employer pension scheme, such as those offered by the civil service, you can still enjoy an income with a prudent investment plan.


There are various types of payout strategies after retirement. Before selecting the investment vehicle that suits you best, consider the following factors:

  1. Individual risk tolerance
  2. Frequency of income
  3. Dividend/return rate (ratio of income to invested amount) and actual income received
  4. Liquidity of assets.

Stay invested and avoid idling assets

Let’s talk about the MPF first, which people do not immediately associate with regular income payments. Under normal circumstances, employees must wait until they reach 65 before withdrawing their mandatory and tax-deductible voluntary MPF contributions. While there is a legal age limit before you can withdraw from the MPF, it is not compulsory for those who have reached 65 to empty their MPF accounts.

In other words, the operation of MPF accounts is not directly related to the age of employees. If there are no special funding needs after retirement, employees can choose to keep the account and postpone withdrawal beyond age 65. This allows the funds in the account to remain invested and take advantage of potential capital appreciation and/or income opportunities.

Retirees with no employment income may be better suited to investments that generate monthly income (cashflow).  Some MPF trustees and fund companies currently offer income funds with a monthly dividend distribution feature. The share class of some retail funds withdraw from the principal to make monthly distributions and enhance the overall dividend rate.

Single stocks or bonds: tend not to pay monthly dividends and expose investors to concentration risk

If you belong to the fortunate group of landlords who do not have to deal with rogue tenants, then you will receive regular rental payments. As such, buying a property and leasing it to a tenant can indeed yield monthly payouts. Of course, before entering into any investment, you are encouraged to do your homework, as taxes relating to rental income may significantly undermine the actual payment. Furthermore, real estate as an asset is relatively less liquid, implying that you may not be able to quickly generate cash for a rainy day.

Two other popular payout tools include equities (such as the high-dividend stocks with robust businesses) and bonds (such as government bonds or inflation-linked bonds). However, both are more liquid, with dividends usually paid quarterly or semi-annually. Therefore it might not suit those retirees looking for monthly funds.

In addition, retirees have to bear higher concentration risk when investing in a single stock or bond, as issuers may be unable to deliver payouts due to different factors, such as financial conditions or regulatory authorities’ requests. Comparatively speaking, a fund contains a basket of holdings, offering better risk diversification while enjoying liquidity benefits similar to equities.

It should be noted that investment vehicles offering payouts do not only appeal to retirees, they are also suitable for those investors waiting for the right opportunity to realise specific financial goals and can utilise idle cash through active, flexible asset allocation for some income.


Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. The information and/or analysis contained in this material have been compiled or derived from sources believed to be reliable at the time of writing but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein. Neither Manulife Investment Management or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein.

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