The Best Investment For Retirees

Shawn Plummer

CEO, The Annuity Expert

It can be tough to know what the best investment option is for retirees. So many choices for wealth management are available, and deciding which is right for you cannot be challenging. In this guide, we will discuss some of the best options for retirees and why they might be a good choice for you. We will also provide some tips on investing to make the process as easy as possible!

What Seniors Should Look for When Investing

When seniors are looking to invest their retirement money, they should consider a few essential factors to make the right decisions. Here are some things seniors should look for when investing:

  • Low-Risk Investments: Seniors are often looking to invest their money in low-risk investments that provide a steady income stream. This might include bonds, CDs, or dividend-paying stocks. While these investments may not offer the highest returns, they are generally less risky than other investments.
  • Diversification: Seniors should diversify their portfolios by investing in various assets. This can help spread the risk and minimize the impact of any losses in one area.
  • Liquidity: Seniors should consider the liquidity of their investments or how easy it is to convert them into cash. This can be important if they need to access their money quickly for unexpected expenses.
  • Fees: Seniors should pay close attention to the fees associated with their investments. Some investment products have high fees that can eat into their returns over time, so choosing low-risk investments is essential.
  • Professional Advice: Seniors may benefit from seeking the advice of a professional financial advisor to help them navigate the complex world of investing. A financial advisor can guide the best investment options for their needs and goals.

Understanding Your Investment Account Options

When planning for retirement, it’s essential to understand the different types of investment accounts available to you. Here are some standard investment account options for retirement:

  • 401(k) Plans: These employer-sponsored retirement plans allow employees to save and invest a portion of their income before taxes are taken out. Employers may also offer matching contributions, which can help to boost retirement savings.
  • Individual Retirement Accounts (IRAs): These are personal retirement accounts that individuals can open with a financial institution. Contributions to traditional IRAs are tax-deductible, while Roth IRAs allow for tax-free withdrawals in retirement.
  • Roth 401(k) Plans: These are similar to traditional 401(k) plans, but contributions are made after taxes. This means you do not have to pay taxes on withdrawals in retirement.
  • Brokerage Accounts: Investment accounts allow individuals to buy and sell stocks, bonds, and other securities. While these accounts have no tax benefits, they offer more flexibility and control over investments.
  • Health Savings Accounts (HSAs): These accounts are designed to help individuals save for medical expenses but can also be used as a retirement savings tool. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
  • Annuities: These are insurance products that provide guaranteed income payments in retirement. They can be purchased through insurance companies and structured to provide income for a certain period or the rest of the individual’s life.
Safest Investments For Retirees

Retirement plans for self-employed or small business owners

Self-employed individuals or small business owners have several retirement plan options available to them, including:

  • Simplified Employee Pension (SEP) IRA: A SEP IRA allows an employer to contribute up to 25% of an employee’s compensation, up to a specific dollar limit, to an individual retirement account (IRA) established for each eligible employee.
  • Solo 401(k): A Solo 401(k) plan is designed for self-employed individuals with no employees. It allows the individual to contribute as both an employee and employer, potentially allowing for higher contribution limits than a SEP IRA.
  • Simple IRA: This is a retirement savings plan for small businesses with 100 or fewer employees. The employer and the employee can contribute to the plan up to certain dollar limits.
  • Defined Benefit Plan: A Defined Benefit Plan is a type of retirement plan that promises a specified monthly benefit at retirement. It can be a good option for self-employed individuals or small business owners who have a high income and want to contribute more than what is allowed in other retirement plans.

The Pros And Cons Of Retirement Accounts

Retirement accounts are designed to help individuals save money for their retirement years. There are several types of retirement accounts, including 401(k)s, IRAs, and Roth IRAs. Here are some of the pros and cons of these accounts:


  • Tax benefits: Retirement accounts offer tax benefits, such as tax-deferred growth or tax-free withdrawals, depending on the type of account. This can help you save money on taxes and increase the amount of money you have for retirement.
  • Employer contributions: Many employers offer matching contributions to retirement accounts, which can significantly boost your retirement savings.
  • Automatic contributions: Retirement accounts allow you to automatically contribute a portion of your paycheck to your account, making it easier to save for retirement.
  • Investment options: Retirement accounts typically offer various investment options, allowing you to choose investments that align with your risk tolerance and retirement goals.


  • Withdrawal restrictions: Retirement accounts have withdrawal restrictions, making it difficult to access your money before retirement age. You may face penalties and taxes if you withdraw money before retirement age.
  • Limited investment options: While retirement accounts offer various options, they may not offer the same investment flexibility as a brokerage account.
  • Contribution limits: Retirement accounts have contribution limits, which may limit the amount of money you can save for retirement each year.
  • Fees: Retirement accounts may come with fees, such as administrative fees or investment fees, which can reduce your overall return on investment.

What Should I Consider When Choosing A Retirement Account?

Choosing a retirement account can be complex, as many factors must be considered. However, here are some things to keep in mind when choosing a retirement account:

  • Tax Implications: Retirement accounts can have different tax treatments, so it’s essential to consider the tax implications of each account. Traditional IRA and 401(k) contributions are tax-deductible, but withdrawals are taxed as ordinary income. Roth IRA and Roth 401(k) contributions are made with after-tax dollars, but withdrawals are tax-free. Consider your current tax bracket, your expected tax bracket in retirement, and your overall tax strategy when choosing a retirement account.
  • Employer Contributions: If you have access to an employer-sponsored retirement plan, such as a 401(k), consider whether your employer offers matching contributions. This can be a valuable benefit that can help to boost your retirement savings.
  • Investment Options: Different retirement accounts may have different investment options, so consider whether the account offers the types of investments you are interested in. Some accounts offer limited investment options, while others allow more flexibility and choice.
  • Contribution Limits: Retirement accounts have annual contribution limits, so consider whether the limits of the account you are considering align with your retirement savings goals.
  • Withdrawal Rules: Retirement accounts may have different rules around when and how to withdraw funds. Consider whether the withdrawal rules of the account align with your retirement income needs and goals.
Where Should Retirees Invest Their Money

Treasury bills, notes, bonds, and TIPS

Treasury bills, notes, bonds, and TIPS (Treasury Inflation-Protected Securities) are all U.S. government securities that can be part of a retirement investment portfolio or strategy. Here’s a brief overview of each:

  • Treasury Bills (T-bills): are short-term debt securities with one year or fewer maturities. T-bills are considered safe investments because they are backed by the U.S. government and are not subject to default risk. However, they typically offer lower returns than longer-term investments.
  • Treasury Notes (T-notes): These are medium-term debt securities with two to ten years maturities. T-notes offer slightly higher yields than T-bills but are still considered relatively safe investments.
  • Treasury Bonds (T-bonds): These are long-term debt securities with more than ten years of maturity. T-bonds typically offer higher yields than T-notes but are subject to interest rate risk and inflation risk.
  • Treasury Inflation-Protected Securities (TIPS): These are bonds designed to protect against inflation. TIPS pays a fixed rate of interest, but the principal value of the bond adjusts for inflation based on changes in the Consumer Price Index (CPI). TIPS can be a valuable addition to a retirement portfolio because they provide a hedge against inflation, which can erode the value of other investments over time.

Immediate Fixed Annuities

Immediate fixed annuities are a type of retirement income product that can provide a reliable income stream in retirement. Here’s how they work:

With an immediate fixed annuity, you pay a lump sum to an insurance company in exchange for a guaranteed income stream that begins immediately. The income stream is typically fixed and based on several factors, including the size of your initial investment, taxable income, age, and current interest rates.

An immediate fixed annuity’s main advantage is that it provides a guaranteed, steady income stream not subject to market fluctuations or interest rate changes.

Dividend-Paying Stocks

Dividend-paying stocks are a type of investment that can provide a regular income stream in retirement. Here’s how they work:

When you purchase a dividend-paying stock, you become a partial company owner. As the company earns profits after income taxes, it may distribute a portion of those profits to shareholders as dividends. Dividends are typically paid out quarterly or annually, and the dividend amount can vary depending on the company’s financial performance and management decisions.

One of the main advantages of dividend-paying stocks is that they can provide a steady income stream in retirement, even if the dividend income or stock price fluctuates.

Savings Accounts and CDs

Savings accounts are bank accounts designed for saving money. They have low minimum balance requirements, offer FDIC insurance, and usually have low-interest rates. In addition, you can easily withdraw money from a savings account whenever you need it.

CDs are also bank accounts designed for saving money. You deposit money for a fixed period and receive a higher interest rate than with a savings account. However, there are penalties for withdrawing money before the CD matures, and they typically have a higher minimum balance requirement than savings bonds.

Money market accounts

Money market accounts are similar to savings accounts. Still, they typically require a higher minimum balance and may restrict how many transactions you can make each month. However, money market accounts also offer some advantages over traditional savings accounts:

  • Higher interest rates: Money market accounts generally offer higher rates than traditional savings accounts, which means you can earn more money on your savings.
  • FDIC-insured: Like savings accounts, money market accounts are FDIC-insured, meaning the federal government protects your deposits.
  • Easy access to your money: Although money market accounts may restrict the number of transactions you can make each month, you can usually access your money quickly when needed.
  • Low risk: Money market accounts are considered low-risk investments, meaning you are less likely to lose money on your investment than with other accounts.

Next Steps

In conclusion, it pays to be informed about investing for retirement. Several options are available, each with its potential benefit or downside that can make a significant difference in the wealth you accumulate. Make sure to research these options and consult with an expert if you have any questions or concerns. By actively managing your investments, you will put yourself in the best position possible to maximize your financial security during retirement. If you want guidance on maximizing your portfolio performance and ensuring that your money works optimally, take advantage of our free quote and get started today!

Best Investment For Retirees

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Frequently Asked Questions

What should I invest in if I have already retired?

Consider investing in bonds, dividend-paying stocks, annuities, and real estate investment trusts (REITs) for generating income and preserving your capital in retirement.

What is the safest investment for retirees?

Retirees often consider bonds and other fixed-income securities among the safest investments because they offer a predictable income stream and are generally less volatile than stocks.

Where should a 70-year-old invest?

A 70-year-old may consider investing in a mix of bonds, dividend-paying stocks, mutual funds, annuities, and real estate investment trusts (REITs) for generating income and preserving capital in retirement.

Where should I put my money if I want to retire early?

If you want to retire early, consider investing in a mix of stocks, bonds, and other assets that provide growth potential and diversification. Maximize contributions to retirement accounts and aim for a high savings rate to build a sizable nest egg.

How do I protect my 401k before a market crash?

To protect your 401k before a severe stock market crash, consider diversifying your portfolio with a mix of stocks and bond funds and adjusting your asset allocation to match your risk tolerance.

How do high-yield savings accounts compare to other investment options?

High-yield savings accounts typically offer lower returns than other investment options, such as stocks and bonds, but they are considered low-risk options for preserving capital.

What investment options offer retirees the highest annual percentage yield (APY)?

Investment options that offer the highest annual percentage yield (APY) for retirees may include high-yield savings accounts, certificates of deposit (CDs), and bonds. Still, they typically come with varying degrees of risk and liquidity.

What are the best investment options for retirees seeking to supplement their Social Security income?

The best investment options for retirees seeking to supplement their Social Security income may include a mix of stocks, bonds, and annuities.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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