As the golden years begin to loom and we quietly tiptoe our way into retirement age, we can gradually let go of the usual anxieties and concerns of life and enjoy retirement. The hard work is done, and it is now time to enjoy the fruits of our labor and embrace a stress-free existence, knowing that everything is taken care of and your savings are ready to support this new chapter in life.

However, the work is not completely over yet, because the chances are your retirement savings might need bolstering through a little financial juggling. For most retirees, it is important at this stage in life to consider an investment portfolio as a means of generating extra income through low-risk investments. The good news is that It does not necessarily need to be a complicated investment strategy.

The whole point of retirement is to relax and unwind, and managing an intricate, risky investment portfolio will certainly not help in that regard. But if you get the basics right and put together a simple, low-risk portfolio, you will be taking pressure away from your savings accounts and giving your retirement that extra bolstering that it probably needs. Investing can also help to protect your financial futures by ensuring a hedge against inflation and other risks associated with the financial system.

But with so many options available, what are safe investments for seniors specifically? Through this article, we have selected a few key strategies to help seniors focus on the main markets usually associated with safer investments, which will help seniors enjoy a more financially comfortable retirement.

Why Should Seniors Invest Their Money?

As seniors enter retirement, they may no longer have the luxury of a steady income stream to rely on. Investing simply provides a means to generate income and help prolong retirement funds – in some cases, it might even be possible to leave your savings accounts completely untouched while your additional investments do all the heavy lifting for you.

Obviously, it is important to invest safely and intelligently, and by doing so, safe investing can provide peace of mind, and seniors can still earn money with minimal risk by diversifying their investment portfolio. Again, it does not need to be complicated, and it certainly does not need to come with risk.

Therefore, investing in safer options can be particularly helpful for seniors who want to enjoy a more comfortable retirement and maybe pass down money to their family members or pay for long-term care. Investing in safe options such as high-yield savings accounts, CDs, and money market accounts can help seniors achieve these goals without taking on unnecessary risks.

However, when considering the various ‘safe’ investment options available, it is important to remember that not all investments are created equal in the midfield of investment options. Some options may have higher risks than others, while others may not provide the returns seniors are looking for. The trick is to find that sweet spot somewhere in the middle so that seniors can find the investment options that are right for them; moderate returns with less risk.

Here are some of the key reasons why seniors should consider an investment portfolio:

old retired happy couple

Generate Income

Investing can help seniors generate additional supplemental income, which can be especially important during retirement. By creating the most suitable investment strategies, seniors can earn a steady stream of income to supplement their savings accounts.

Combat Inflation

Over time, the cost of living can, of course, rise quite significantly. This will often eat into the value of a senior’s retirement savings. By investing in safe options with higher returns, seniors can help fight back against inflation and ensure that their savings retain a little more strength over time.

Diversify Their Portfolio

Regardless of strategy, diversification is an important part of any investment plan and can be particularly helpful for seniors who should avoid putting all of their eggs into one basket, so to speak. By spreading their investments across a broad selection of different asset classes, seniors can help minimize risk and maximize returns.

Pass Down Wealth

Many seniors want to leave a legacy for their family members, and investing can be an effective way to achieve this. By investing in safe options, seniors can grow their wealth over time and leave a financial legacy for their loved ones while protecting their savings accounts at the same time.

Pay for Long-Term Care

While the majority of seniors will be fortunate enough to see out their years in relative comfort, the harsh reality is that as many seniors age, the need for long-term care may also become a very real prospect. Investing in safe options can help seniors pay for these expenses without draining their savings account.

Essentially, investing can be a powerful tool for seniors looking to secure their financial future and negate the anxiety so commonly associated with financial planning. There is a knack to it, however, and by investing safely and intelligently, seniors can generate additional income, combat inflation, diversify their portfolio, pass down wealth, and pay for long-term care – all without affecting their savings account too much.

The goal here is simple, really; with the right investment strategies, seniors can achieve their financial goals and enjoy a comfortable retirement. We have hand-picked a range of strategies and assets for seniors to consider and will explain the benefits of each one. Our guide includes the following seven strategies for consideration:

  1. High-yield savings accounts
  2. Money market accounts
  3. Certificates of deposit (CDs)
  4. U.S Treasures (Treasury bills, treasury bonds, and treasury securities)
  5. Dividend Paying Stocks
  6. Fixed annuities
  7. Real estate investment trusts

Let’s take a look at each strategy in a little more detail and explore the reasons why seniors should consider each option for a more comfortable retirement.

pensioner uses a computer

Safe Investments for Seniors

High-Yield Savings Accounts

Seniors who want to grow their money passively might take advantage of high-yield savings accounts, which often provide higher interest rates than conventional savings accounts. There are no big financial dangers or monthly fees to be concerned about because this safer investing option is FDIC-insured (for the unfamiliar, that’s the federal deposit insurance corporation).

Additionally, because the income is compounded daily, there may be a motivation to save money and see it grow more quickly than with a conventional savings account.

For example, seniors would receive $1008 in interest if they deposited $50,000 into an AMEX high-yield savings account with a 0.40% annual percentage yield (APY) for five years with no monthly deposits. Even though the returns are not particularly high, this can be a safer investment choice than buying stocks or other high-risk securities. 

Although this is a very safe alternative for people searching for a less stressful investment plan, the income generated on these accounts may turn out to be insignificant due to rising inflation and living expenses. With that in mind, this option would be more suitable as part of a broad portfolio.

Money Market Accounts

Generally considered a safe and accessible investment option, a money market account is a good option for seniors. With higher interest rates than traditional savings accounts, a money market account also provides the added benefits of check writing and debit card usage.

There are several restrictions on money market accounts, though. For instance, six transfers and electronic payments are normally the maximum number of transactions permitted per month; any further transactions may result in fees, penalties, or even the conversion of the account to a checking account. It is advised to keep transactions to a minimum and keep the money alone to profit from the higher interest rates.

Again, this is not something we would suggest investing in as a single strategy. Options such as money market accounts, along with other low-risk investments like treasury bills, treasury bonds, and high-yield savings accounts, can help seniors maintain their financial stability without sacrificing peace of mind.

Certificates of Deposit (CDs)

Time deposits, known as Certificates of Deposit (CDs), provide a fixed rate of return for a certain duration. For people searching for a low-risk investment, certificates of deposit (CDs) are a desirable option because their interest rates are typically greater than those of conventional savings accounts. Investors have an additional degree of safety because of the FDIC’s insurance of CDs.

U.S Treasuries

Treasury securities, which are backed by the US government and offer investors peace of mind, should be considered by those looking for safety in their investments. Bills, notes, bonds, and Treasury Inflation-Protected Securities (TIPS) are just a few of the different types of Treasury securities. Inflation or deflation, as determined by the Consumer Price Index, is taken into account for determining the main value of TIPS, a particular type of Treasury securities.

While Treasury notes and bonds take longer to mature than Treasury bills, Treasury bills expire in one year or less. Treasuries provide low returns despite having little risk. Additionally, Treasury prices will decrease if interest rates rise. The biggest exposure to interest rate risk is in Treasury bonds, while it is minimal or nonexistent in Treasury bills. All things considered, Treasuries are a secure investment choice for individuals on a fixed income, particularly seniors searching for a dependable investment that can be quickly converted to cash if necessary.

Dividend-Paying Stocks

Seniors seeking a steady source of income can choose dividend-paying investments. These shares distribute dividends to shareholders, which represent a portion of the company’s earnings. Due to the constant stream of income they offer and the typically well-established and financially secure nature of the corporations that issue them, dividend-paying stocks are generally regarded as having lesser risk than growth stocks.

When considering dividend-paying stocks, seniors should (as always) keep in mind their general investment goals. The reason for that is simple; while these stocks can be a good source of income, they do carry some risks. There is always the potential to lose money, for example, if the company experiences financial difficulties or if the stock market takes a downturn, and while the prospect of that happening is unlikely, it can happen.

However, with a well-diversified portfolio selecting several assets, dividend-paying stocks can be a great option for seniors looking for a stable source of income with a very low potential to lose money – just be aware that there is some risk, although that could be said of most investment assets.

Fixed Annuities

Fixed annuities are a good choice to take into consideration if you’re a senior looking for low-risk investing. Basically, when you buy an annuity, you enter into a contract with an insurance company where you pay a premium and get a set amount of income payments over a predetermined amount of time in exchange.

The promise that you can’t outlive your money is probably the best thing about annuities. Annuities can also diversify your portfolio and lower your exposure to interest rate risk. Admittedly, they can be complicated, and since the monthly payments are fixed, you are also susceptible to inflation. To that end, seniors should be cautious to thoroughly assess their risk tolerance before investing because surrender fees could also be incurred if they choose to terminate their contract early.

Wrap Up

coins on the table

In conclusion, seniors who want to safely invest their money have a variety of low-risk investments to pick from. Savings and money market accounts that are FDIC-insured provide a safe haven for cash while earning a meager interest rate. Diversification through investment portfolios, purchasing Treasury instruments like bonds, notes, and bills, and researching annuities are further low-risk investment options.

These six strategies can all provide prospective profits while, at the same time, lowering risk. However, seniors should remember that before making any investment selections, it’s crucial to take into account their own risk tolerance and seek out expert financial guidance.

Overall, seniors can safeguard their retirement funds and continue to enjoy a financially secure retirement by carefully weighing the numerous low-risk investing options available.

Jeremiah Konger
Jeremiah Konger
CEO at Annuity Association

Jeremiah understood his whole life the importance of community and caring for those who are a part of it. Starting his first business venture at the age of 23, he gained invaluable experience in working with others for a joint purpose.
He founded his first wireless retail business in 2011, expanding it from one store to 12 locations across the state in just three years.
Once he sold his company, Jeremiah began the journey he’s on today, using his talents and experience to work with seniors in order to help them find the best means of financing their retirement plans.

He’s found his true calling working as a proud member of the Annuity Association, assisting retirees in building their safe financial future.