Depending solely on income savings after retirement is risky as the value of savings might go down due to economic fluctuation. Having some low-risk investment can provide financial security after retirement. Low-risk investment, although provides low-investment return, will ensure a steady flow of interest income. There is low-risk investment for retirees that you must consider to invest on. However, this risk varies from no risk to some risk. Here are some low-risk investments for retirees.
Top Low-Risk Investments for Retirees
To optimize the benefits of retirement investment it is important to understand different investment types. Here are some of the top investments for retirees.
1. High-Yield Saving Accounts
High-yielding savings accounts are one of the safest investments for retirees that offer modest return on your money. By investing in a savings account you will never lose money. Accounts being government-insured up to $250,000 per account, it provides guaranteed compensation if the financial institution fails. However, the possible risk factor is that inflation can lower the purchasing power of the dollar.
2. Money Market Funds
Money market funds are other low-risk investments for retirees. It is a combination of CDs, short-term bonds and other low-risk investments intended to diversify risk. These are sold by brokerage firms and mutual fund companies.
One of the major benefits of investing in money market mutual funds is that it is liquid. This allows you to remove the fund whenever you want without any objections. Additionally, it is considered to be safe by Ben Wacek, the founder and financial planner of Guide Financial Planning in Minneapolis.
3. Series I Savings Bond
Series I saving bond is a low-risk bond that offers considerable flexibility with market fluctuation. When inflation hits the interest rate might go up but when the inflation rate comes down the interest rate falls as well. The bond is purchased from the TreasuryDirect.gov, operated by the U.S. Department of the Treasury. The most beneficial aspect of this bond is that the bond protects your investment from inflation. Moreover, as it is backed by the U.S. government, it is considered a safe investment.
4. Treasury Bills, Notes, Bonds and TIPS
The U.S. Treasury issues Treasury bills, notes, bonds, and inflation-protected securities which are collectively known as TIPS. Investing in TIPS is a viable option for most retirees. The Treasury bills mature in one year or less, the bonds mature in 30 years, notes stretch out up to 10 years and the principal value of TIPS fluctuate up and down with inflation rates.
The benefits of investing are that all these are liquid securities and can be purchased or sold directly as well as through mutual funds. On the other hand, if you do not remove the Treasurys before they mature, there is no risk. However, if you remove it before maturity you can lose a considerable amount of the principal due to inflation.
5. Final-Expense Insurance
Investing in the final expense insurance is a responsible move for retirees. The final-expense insurance covers all the end-of-life expenses along with burial and funeral costs. These include geriatric medical bills, credit card loans, outstanding mortgage payments, burial and funeral costs. These financial support protect family members of the deceased person for financial burdens in their difficult times. Additionally, no medical examination is required to apply for final-expense insurance. It is advisable that you consult with premium final expense & burial insurance in Florida to avail the best quote.
Conclusion
The blog has discussed the top low-risk investments for retirees. Hope these provide convincing and insightful for you. All the investment plans cater to specific needs. Thus, it is important to purchase the ones that provide maximum benefits for you. Make sure you consult with top advisors to understand the best option for you as per your unique needs.