The safest place to deposit your retirement funds are low-risk investments and savings options with guaranteed growth. Low-risk investments and savings options include fixed annuities, savings accounts, certificates of deposit, treasury securities, and money market accounts. Of these, fixed annuities usually offer the best interest rates. While bonds, as a class of securities, are not going to generate particularly high returns, they offer stability and the prospect of some growth.
Within this class of securities, retirees must pay close attention to income and to municipal general obligation bonds. In addition to offering investors tax-free interest, these types of securities can help prevent investors from moving to the next highest tax bracket, something that pensions and minimum distributions required by IRAs and 401 (k) can do. Mutual funds focused on municipal bonds are also an attractive option for many retirees. Bond mutual funds allow you to invest in a variety of bonds, often with stagger maturity dates.
You can earn consistent income and have your bond investments managed by experienced professionals. Dividends represent a percentage of profits paid to shareholders. Not all stocks pay dividends, but among those that do, there is a hierarchy. At the top are the so-called Dividend Kings and, after them, the Dividend Aristocrats.
The former belong to the S%26P 500 and have increased their dividends 50 years or more in a row; the latter belong to the S%26P 500 and have increased their dividends 25 years or more in a row. Mutual funds that focus on dividend stocks could also be a good option. Since mutual funds are managed by the best investment professionals, their investment decisions will be made by those who know them. Mutual funds also allow you to invest in many different stocks, reducing risk and protecting you if one of the companies doesn't perform as well as expected.
Certificates of deposit, or CDs, are a solid, low-risk investment option for retirees. Basically, you give a certain amount of money to a bank. You can usually choose this amount, although some banks have minimums. When you deposit the money, you'll choose a term, usually from one month to 10 years.
You can't touch the money until the deadline is up. When it's over, you'll get your money back, plus interest. The interest rate is predetermined and increases the longer the term. There are many ways retirees can invest even after their workdays are finished.
This is important because you want your retirement savings to last as long as possible. And because people are living longer than ever, their savings may have to stretch more than you thought. From stocks and bonds to cash and certificates of deposit, there are plenty of options. The important thing is to find the asset allocation that is right for you.