5 ways to continue investing during your retirement
Retirement is the ultimate goal for many employees, but it can often be burdensome. Before retiring, you may have pondered things like: Should I retire earlier than later? How much money should I be saving each month to provide for myself and my loved ones after I retire? Are there ways to continue investing during retirement? And the biggest question of all is, what if I retire and my current pension, social security, and or retirement savings aren’t enough?
These are all valid questions to reflect on before you retire. Some investors or retirees may receive the answers to the questions above before they even leave their careers. But what if you’re one of those who haven’t? Now, not only are you a retiree, but you have financial questions that you still need answers to.
How a Financial Advisor Can Help with Investing
If you still have questions that you hope to find answers to, you may want to find a financial advisor. Working with a financial advisor has many benefits and they offer a breadth of services that may be able to assist you along the way. Not only can they help ensure your retirement plan is working for you, but they can help answer investing questions, address savings concerns, and help you find resources that can contribute to your retirement income. While a financial advisor may recommend having an evaluation done, another thing they may have you consider is to continue investing in your retirement savings.
After all, retirement is not an excuse to stop saving. And having your money sit in a bank account that earns no interest isn’t always in your best interest. A financial advisor can help you to maximize your savings potential by encouraging you to do things like put money into a money market fund or a savings account with high-interest rates. This way, your money keeps growing.
In this case, what should you be investing in to continue adding to your retirement savings?
Here are Five Common Investments to Make During Retirement
It’s important to keep enough cash to cover basic needs like paying bills and buying groceries. You may also want to keep cash for fun things like going out to eat or traveling.
Bonds aren’t great investments, but they can help you build wealth if you’re willing to accept lower rates of return. They’ll probably keep up with inflation, so they won’t lose value either. However, they might not do much better than stocks. In addition, they could take a huge loss if interest rates rise sharply. Before investing in bonds, consider how much risk you’re comfortable taking.
A popular type of retirement investment is a bond-laddered portfolio. This means investors can purchase a series of bonds, and over time, these bonds will mature, resulting in an inflow of cash from interest payments instead of one large one-time payment.
While bonds aren’t always the best investment, they are one of the most popular ones as they provide steady returns and little worry about market fluctuations.
Stocks are often considered an asset class best suited for younger investors, however, retirees can also benefit from them. A rule of thumb in this instance is investors should allocate about 35 percent of their savings into stocks. Of course, this varies based on individual needs as well as risk tolerance. You should talk to a financial advisor before deciding what amount to put into stocks.
Something to keep in mind when it comes to stocks is just important it is to choose the right ones. Seasoned investors shouldn’t just chase big gains from trendy tech stocks in the same way young investors do. Instead, older investors should look for stocks that offer slow and steady growth and maybe even pay out dividends. Dividends are the distribution of a company’s earnings to its shareholders and are determined by the company’s board of directors.
Dividend stocks can be a great investment option.
Certificates of Deposit
Certificates of Deposit, or CDs, are an excellent choice for those who would like to invest in something safe while also earning a little interest. Essentially, you put money into a bank account. Then you wait for the term to end. At the end of the term, you receive your principal back, along with interest earned during the period. The interest rates vary depending on how long you take out the loan. Make sure you do your research before choosing a CD. You need to be able to live off the money during the entire term without taking any withdrawals before the end date.
Renting out an apartment or house can be a good way to earn extra money if you’re able to afford the cost of buying one. However, you shouldn’t invest unless you’re willing to put in the necessary time and effort. Keep in mind, rental properties can come with their own set of challenges and necessities. If you’re already on a fixed budget, having a rental property may not have the intended effect on your retirement income or portfolio. For others with income available to maintain a property and list it, this is a consideration you may want to add to your portfolio. It can help serve as an additional source of income during retirement and benefit you, a spouse, or your children down the road.
Here’s the Bottom Line
Retired people often find themselves not knowing what to do with the money they’ve saved. Some people choose to put it into investments. Others decide to spend it. Either way, as a retiree you should make sure you take care of your finances. If finding additional investment opportunities is a challenge or you’re looking for ways to increase you retirement income, you may want to consider working with a financial advisor if you aren’t already.
If you’re set on investing on your own, you may want to consider joining Planning Made Simple. As a Planning Made Simple member not only do you have access to resources, like a Beginners Guide to Investing, that can benefit you along your journey of investing, but you also have a support system of like-minded investors you can ask questions of in our one-of-a-kind community. Every member is paired with a Planning Made Simple Coach. These coaches are financial advisors who have years of experience in the industry. They can not only help you find answers to your questions, but they can help you determine the next best steps for your financial situation, retirement savings, and provide you with tips on how you can become a better investor. Join Planning Made Simple today and discover ways you can take retirement planning and retirement savings into your own hands.