Planning for retirement doesn't end when you collect the last paycheck from your employer. Being pro-active about protecting the money you have contributed to retirement is important. Making smart investments and adjustments after retirement is equally important.
According to life expectancy data compiled by the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84, a woman 86. Many retirees find themselves trying to find safe and reliable investments. The goal is to protect your income streams so you don’t run the risk of running out during your lifetime.
- Bond funds are one choice for many retirees because they are managed to generate regular income payments. This money can be used to help fund your retirement spending needs. Bonds generally have less risk than stocks, although they do have some risk.
- Stock funds are designed for long-term capital appreciation. These are often used to help people save for retirement, and they may make sense for many people after retirement. That's because in the long run, stock funds are better at outperforming inflation than bond funds are. Because the prices of the things you buy are likely to go up while you are retired, you'll want your income to go up, too. Incorporating investments that have the potential for capital appreciation into your retirement investing can help your overall portfolio keep pace with inflation. Keep in mind; all types of investing involve risk, including potential for loss.
- Mutual funds are used by many people who have long-term investment goals. Mutual funds are diversified and managed by a portfolio manager that purchases a wide variety of securities that fit the investment objective of the fund. Mutual funds spread out the risks of the portfolio due to the diversification. Diversification won't eliminate all risk, but it may help balance them.
Finding a reliable investment income and understanding how to invest is possible. Finding the right balance between risk and return is key. Looking at the sources of your retirement income, the flexibility of your budget and your ability to tolerate risk is a good way to start. Because investing is a lifelong pursuit, you'll want to learn as much as you can so that you can adapt your investments to your changing life needs.