As a retiree, you should have been saving for most of your life, but now you have to decide how to allocate your money so it will serve you best. Hopefully, you set aside money from each paycheck either in an employment-sponsored 401(k), stock options, or one of many different types of individual retirement accounts (IRAs). While you might have been saving for the better part of your life, you can’t stop money management once retirement age comes. Unsuspected medical costs, increased taxes, natural disasters, and more can cause a financial burden with little to no preparation time. So you need to plan wisely.
But as retirement time rolls around you might need to make some adjustments to your investment allocations. With some wise investment, you can even be living a more comfortable life as a retiree. Here are some investment options that seniors should consider.
Fixed Assets
Fixed assets are any investment that guarantees to repay the same number of dollars as you invested (plus interest). The most common fixed asset is a savings account. Unfortunately, they don’t pay much in the way of interest. There are also fixed asset money market accounts, mutual funds, CDs, etc. These should be the basis of your “working capital” i.e. where you pull your day to day expenses from. A typical approach is to have a checking account where your Social Security check is deposited and where you pay your bills from. You might also have a Savings account that has some back-up money where you can pull from for larger less common purchases. The next level up includes CDs, Money Market Funds and Mutual Funds that can be accessed less frequently but still don’t fluctuate with the market.
Once these two buckets are full you can consider more advanced investment possibilities.
Bonds
There are a variety of different types of bonds. A Bond is basically an I.O.U. issued by either a Company (i.e. Corporate Bonds) or state and local governments (Municipal Bonds), bonds are also known as “debt securities.” The advantage of a municipal bond is that any interest earned is free from income tax payments. Municipal bonds tend to accrue more interest than their U.S. Treasury bonds counterparts. With higher yields, shorter maturity, and tax-free possibilities, municipal bonds can pay off well, especially for those in higher tax brackets.
Dividend-Paying Stocks
While not as safe as some other securities, dividend-paying stocks can make for notable market gains while protecting your assets from the ravages of inflation over the longer term, providing investors a reasonable balance of both growth and income.
High dividends produced by these stocks will often help to fight any declines faced in the stock market, allowing investors to continue receiving income even while the stock market fluctuates. Furthermore, these types of stocks will continue to perform better even under bear markets. For those investors solely interested in preserving their finances during their retirement years, a dividend-paying stock is a smart option to add your portfolio. Not only will it allow you to continue earning income throughout retirement, but it will also help you fight possible inflation for the future to come.
Real Estate Investment Trusts
Real estate can be a lucrative investment for investors of any age, especially for those that are also willing to be property managers and landlords. However, if, at your age, you’re not interested in taking on either of those roles, a real estate investment trust (REIT) can allow you to still invest in real estate while being hands-off.
REITs are a safe way for individuals to invest in large real estate productions. These real estate trusts are often large-scale operations that produce notable amounts of income, as they are not developers for resale purposes. Rather, they purchase and develop properties to add them to their investment portfolios.
These make for a great investment option for seniors, as it allows you to become “part” of the ownership—earning a share of the income produced without actually partaking in the process of managing and buying real estate.
Annuities
A contractual agreement made between you and an insurance company, annuities are fixed contracts that make for solid predictability and little worry. The contract signed between you and the insurer will pay you a fixed income on a monthly basis for a specified period of time (often the remainder of your life). Generally, an annuity makes the most sense for people who do not have a fixed pension and would like a guaranteed source of income.
The benefit to these contracts is that it provides you with an immediate, set income that will be guaranteed for the years you have outlined. It may be worth your time to consider this agreement, along with the contract you are signing, as some fees might be applicable dependent on the insurer; dependent on the contract signed, your tax liability might also be affected. Further, market declines can affect the worth of your incoming income, which is something to consider. They are only transferrable to heirs if you have one with a death benefit.
Precious Metals
With an ever-changing market and trade wars taking place between countries, there is worry concerning the long-term condition of the U.S. Dollar (USD). To hedge against possible degradation of the USD, it is prudent for investors to begin considering precious metals (again). Once a contender against the USD, precious metals such as gold and silver have long been marketable investments that people have made financial gains from. With a long and rich history, precious metals have followed the trajectory of human growth, from the Bronze Age all the way up to their implementation in our current technology.
Precious metals make for a sound investment for seniors due to their low volatility and continued market strength. By setting up a basic precious metals IRA, you can begin investing in precious metals, from minted gold coins to bars of palladium, storing them in your portfolio to gradually accrue interest. And, if an IRA doesn’t pique your interest, you can still invest in precious metals, storing them either at home or in some secure location to have “unbanked” assets, free from the USD.
There are many investment options available for seniors looking to secure their assets throughout their final decades, but these are some of the best options to consider. If you have any questions concerning potential investments, especially the precious metals market, our staff is more than happy to discuss all of them, helping you to protect your finances while continuing to earn income from year to year.
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