Want More Reliable Retirement Income? This Vanguard ETF Could Be Worth a Look. |

Growing wealth for retirement can be a challenge. But once you reach retirement age and are ready to start tapping your savings, your goal may shift from growing wealth to preserving wealth while maintaining a steady income.

Social Security can help to some degree. But you may need additional income out of your portfolio to supplement those monthly checks. You may also want to limit your exposure to the stock market at that stage of life.

Bonds are a great tool for producing steady income. And they don’t tend to carry nearly the same level of risk as stocks.

You could invest in bonds individually for retirement. But a better bet may be to invest in a whole bunch of high-quality bonds at the same time. And one fund makes that easy.

Why the Vanguard Total Bond Market ETF could be perfect for your retirement

When you’re decades away from retirement, market downturns can be easier to ignore because you have time for your investments to recover. In retirement, you may be tapping your portfolio consistently to generate income.

Doing so during a market downturn increases your risk of running out of savings. That’s why it’s important to have some investments, like bonds, that are less prone to volatility.

What makes the Vanguard Total Bond Market ETF (BND +0.17%) a good choice is that it gives you exposure to a wide range of investment-grade bonds through a single investment. This diversification helps reduce the impact of problems affecting any single issuer or sector of the bond market.

Plus, like many Vanguard funds, the Vanguard Total Bond Market ETF has a very low expense ratio of just 0.03%. That means you won’t have to worry about expensive fees eating away at your returns in retirement.

Know the risks

The Vanguard Total Bond Market ETF typically carries less risk than funds with a focus on stocks. But you should know that the fund is still sensitive to changes in interest rates. When rates rise, bond prices generally fall, which could temporarily reduce the fund’s value.

Also, if you’re looking for a way to beat inflation, the Vanguard Total Bond Market ETF won’t necessarily get you there. The income the fund generates for you could be very valuable in retirement. But inflation tends to erode the value of fixed-income payments over time. If you want to stand up to inflation, you’ll generally need to branch out into stock-focused investments, too.

But all told, the Vanguard Total Bond Market ETF is a great choice for steady retirement income. As long as you recognize the fund’s limitations and incorporate it into a broader strategy, it could end up serving you well.

Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.