Core Insights - Older adults are increasingly considering index funds and ETFs as they approach retirement, moving away from traditional mutual funds [1][2] Group 1: Benefits of Index Funds and ETFs - Index funds and ETFs facilitate cash flow extraction for retirees, allowing more income distributions to reach them due to lower fees [1] - For total-return-oriented retirees, index funds and ETFs simplify the process of rebalancing portfolios to meet living expenses while maintaining target asset allocation [2] - Index funds and ETFs require minimal oversight, making them suitable for retirees who prefer not to monitor their investments closely [2] - Controlling portfolio risk is easier with index funds and ETFs, as adjusting the stock/bond mix is more effective than changing underlying holdings [3] - Index funds and ETFs are highly tax-efficient, which is crucial for retirees with larger portfolios and higher taxable account shares [4] Group 2: Cost Considerations - A portfolio with lower returns benefits from low-cost investment products like index funds and ETFs, which help maximize net returns for retirees [4]