Retirement is a time to enjoy the fruits of your labor and relax, but it’s also an important time for financial planning. Investing can help you maximize your retirement savings and ensure you can maintain the lifestyle you’ve been looking forward to. However, investing at this stage of life isn’t something you want to jump into. It’s important to understand your options first.
Here is a list of nine investments you may want to consider during your retirement:
1. Certificates of Deposit (CDs)
CDs are low-risk, FDIC-insured savings products that provide guaranteed returns. They are savings accounts offered by banks and credit unions that pay a fixed interest rate. They are considered a safe investment option for retirees because they are FDIC-insured, meaning your principal deposit is guaranteed up to $250,000.
This type of investment offers flexibility regarding time frames and yield levels, so retirees can find one to fit their needs. Some CD products offer higher yields in exchange for a longer period.
Annuities are a type of insurance product that is an option for those who want to ensure consistent cash flow later in life. They are typically considered a safe investment option for retirees because they provide a guaranteed income stream. However, it is possible to lose some of your account’s value if the insurance company that backs it defaults as a result of bankruptcy.
This type of investment can have high fees, so it’s important to research and compare the options for annuities before buying. You can also choose a deferred annuity, which allows your money to grow tax-deferred and provides an additional lump sum payment.
3. Money Market Accounts
Money market accounts provide liquidity and security due to the FDIC insurance they carry, and they often have higher yields than savings accounts. This can make them an attractive option for retirees.
Retirees can use the money in a money market account to cover your day-to-day expenses and still earn interest. The money market account will also allow you to withdraw funds without penalty.
4. Treasury Bills
Treasury bills are short-term debt investments that are issued by the US government, with maturities from four weeks to one year. They are backed by the full faith and credit of the US government, making them a safe investment option for retirees.
5. Exchange-Traded Funds (ETFs)
Exchange-traded funds are diversified funds that enable investors to benefit from the performance of various investments within a single fund. ETFs offer diversification benefits and low costs, and they can be used to invest in multiple markets.
6. Real Estate Investment Trusts (REITs)
Real estate investment trusts own, manage, or finance income-producing real estate investments. REITs allow investors to benefit from professionally managed real estate without directly purchasing it.
These are debt instruments issued by companies or governments and backed by their promise to pay interest regularly. Bonds pay a fixed rate of interest to investors and can often be held until maturity, so the investor knows exactly when they will receive their principal back.
8. Dividend-Paying Stocks
Dividend-paying stocks are stocks that pay a regular income to shareholders through dividends. They provide a steady income stream and can help preserve capital, making them an option retirees may want to consider after careful research and consulting with financial professionals.
9. Tax Liens
Tax lien investing involves purchasing a tax lien certificate from a government entity on a property with delinquent property taxes. You will then earn safe, secured, fixed interest interest rates. If the taxes are not paid, you may have the right to foreclose on the property, though this typically does not happen.
This type of investing can offer a stable return on investment, often at interest rates higher than traditional fixed-income investments such as bonds. Tax lien investing can also provide a steady income stream, as the interest and penalties accrue until the taxes are paid.
It’s important to note that tax lien investing can be complex and may require some research and due diligence. You will need to understand the laws of the specific state and county where the property is located. Taking a free investing course provided by the US Tax Lien Association can be extremely helpful.
No matter what type of investment you choose for retirement, it’s important to consider your goals and financial situation before making any decisions. It’s also important to remember that investing involves risk, so it’s important to be aware of the potential risks and rewards associated with any investment.
It’s a good idea for retirees to consult a financial advisor or other professional if you have questions about your investments. With the right strategy, you can ensure your retirement savings are as safe as possible.