Potential Safe Investments to Consider when Retiring: 4 Options
How much do you have saved for retirement? Many are concerned about outliving their retirement savings and investments. If this is a concern for you, then you may want to consider moving your money to more conservative investments intended to minimize market risk.
Certain financial tools strive to allow you to live off of the income generated while pursuing low levels of risk to your initial investment. This will enable you to plan to live off of your savings for a longer time.
If this appeals to you, consider the following four investment options during your retirement.
This investment tool is a contract that you have with an insurance company. Annuities are typically either fixed or they have a variable rate of return based on the stock market's performance. They often have limits in place to shelter you from too much loss should the stock market take a large downturn.
If you decide to invest in an annuity, read the agreement carefully and pay close attention to the commissions and fees. You also should research how the investment will change your tax liabilities.
*Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.
2. Government Bonds
Bonds are long-term securities that pay a higher interest rate than a CD or money market fund. You could invest in a Treasury Bond (T-bond) with a maturity length of 30 years and an interest rate of 2.32%.
Many financial professionals suggest retirees use T-bonds to make up the majority of their retirement portfolio. This is because Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value.
3. Real Estate Investment Trusts
Investing in real estate on your own can be risky and time-consuming. It also restricts the liquidity of your investment. If the market abruptly moves downward, you may be stuck with your property for years or risk a substantial loss.
A real estate investment trust (REIT) will also pay you a dividend. They may also be suitable investments to have when the stock market declines.
Look for REITs that have a history of consistent dividend payments. You should also pay attention to the type of real estate the REIT invests in.
*Investing in REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objective of this program will be attained.
4. Dividend Stocks
While the stock market is not risk-free, you can strive to limit your risk by selectively choosing which companies you invest in. Several well-established companies pay a regular dividend.
Investing in dividend stocks also help you ride out a dip in the stock market. You can continue to earn while you wait for the stock's value to come back.
*The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.
Consider These Conservative Investments
If you're looking for ways to maximize your retirement savings, consider these conservative investments. You can diversify your investments by utilizing more than one of these options.
If you're struggling to determine which is the best option for you, we can help. Our financial planning team can help assess your current financial situation and plan out the best course of action for your retirement future.
Contact our team today, and let us help you create a plan for your retirement.
*Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.