Smart Investment Strategies for Wealthy Retirees

When you retire, you need your money to work for you. After years of saving and investing, you want to know: "How do I make my money last?"

Wealthy retirees are already at a great starting point. But even with a strong financial base, it's important to have an investment strategy that manages your assets while also letting them have an opportunity to grow. Here are some ways to invest when you are in your 60s, 70s, and beyond.

Ask the Appropriate Questions

Before you make any big money moves, you may need to ask yourself a few key questions, which might include:

• How long do I need this money to last?
• What are my annual expenses?
• What income do I get from Social Security, pensions, annuities, rent, or other sources?
• How much do I need to take from my savings every year to cover basic expenses?

Once you know the answers to these questions, you may decide how to allocate your money—whether that means investing it, saving with certificates of deposit, keeping it in cash, spending it, or some other strategy.

Stay Balanced with Your Investments

As you get older, you’ll probably want to take less risk than you did when you were just starting out. But that doesn’t mean you should stop trying to increase your investments.

Work with a financial professional to develop an investment plan that is appropriate for your circumstances, including your age, health, and obligations.

Safe Ways to Keep Growing Your Savings

When you're retired, your risk tolerance commonly decreases. Fortunately, there are some low-risk investments to consider that earn interest without putting your principal at stake.

1. Certificates of Deposit (CDs)

With CDs, you lend money to the bank for a set amount of time. When the time is up, you get your money back — plus interest. It’s simple and potentially safe as long as the bank is insured by the FDIC and the amount you deposit does not exceed the insurance limits per qualified account.

You might even "ladder" these CDs by purchasing multiple CDs with different terms and end dates. For example, if you put $50,000 into five CDs (so $10,000 each), with terms ranging from one to five years, you could create a financial plan that you receive $10,000 (plus interest) every December 31 for the next five years.

2. Treasury Bills

T-bills are backed by the U.S. government. You loan money for a short period and earn interest. You just need to hold T-bills until they mature to avoid losing any interest, and your principal is safe unless the U.S. dollar collapses or loses purchasing power due to inflation.

3. High-Yield Savings Accounts

These work like regular savings accounts, but they pay more interest. Your money is usually available when you need it.

4. Fixed Annuities

These annuities involve investing money with an insurance company; in return, they pay you a set amount of income every month. This might be a reasonable way to make sure you always have money coming in. Just be sure to choose a reputable insurance company to have a reasonable chance that your investment stays safe as guarantees are based on the claims paying ability of the issuing company.

5. Money Market Accounts

Money market accounts are part checking account, part savings account. With these accounts, you earn higher interest like a savings account, but also write checks or use a debit card.

Don’t Forget About Required Minimum Distributions Once you turn 73, you must start taking money out of your 401(k) or Traditional IRA, even if you don’t need it yet. This is called a Required Minimum Distribution, or RMD.

You’ll have to pay taxes on any RMD money you withdraw. That’s why it's smart to talk with a financial professional to plan your withdrawals and avoid a big surprise at tax time.

If you have the enviable problem of having too much money in accounts that are subject to RMDs, it may make sense to take a huge withdrawal (and corresponding tax hit) one year and then park these funds somewhere else, where you may access them only when you need them.

Extra Strategies for Wealthy Retirees

If you have more savings than you need for daily living, there are a few extra ways to use your money wisely.

First, investigate life insurance policies that include benefits for long-term care costs. Long-term care might be expensive, so having a policy in place to cover this care may help manage your assets.

You may also use your investments to cover any estate taxes or other expenses, helping your loved ones avoid selling assets or property to pay these taxes after you're gone. And savings may also be used to help pay for your grandchild's college education or even set them up with their own life insurance policy that may build value over time.

If your grandchildren have any earned income while they're working and in school, you might even help contribute to a Roth IRA for them (up to the amount of their annual earnings). Having a fully-funded Roth at a young age may help set the path for a managed financial future.

Final Thoughts

Even in retirement, your money may keep growing. You just need to be smart about where you put it. For most retirees, this means keeping some in safe places, keeping some growing, and making a plan for how and when to spend funds.

Most importantly, don't go it alone. A trusted financial professional might help you choose the appropriate strategies for your life, family, and future. If you need help

making your retirement money last, talk about a plan that fits your goals and your lifestyle. Access our checklist for more information and some helpful tips.

 

 

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_{Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.}

_{This article was prepared by WriterAccess}

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